The administration cannot force closely held private corporations to pay for contraception in their health insurance plans if it violates their religious beliefs, a divided Supreme Court ruled Monday, dealing a political and logistical setback to President Obama's signature law.
Justices ruled that a 20-year-old federal law, passed overwhelmingly and signed by President Clinton to protect freedom of religion, trumped the president's desire to have contraception paid for by employers. But the court welcomed the administration to try to come up with other ways of providing birth control without imposing a burden on employers.
Indeed, it was just such a solution — the "accommodation" that the administration came up with for religiously affiliated nonprofits such as charities or schools — that led the justices to conclude the Health and Human Services Department could have promoted contraceptives through less-intrusive means.
"This is not a case where it can be established that it is difficult to accommodate the government's interest, and, in fact, the mechanism for doing so is already in place," Justice Anthony M. Kennedy, a vital swing vote, said in a concurring opinion.
Pro-life groups and Republican leaders, though, said the ruling marked a major victory for religious rights, but President Obama and fellow Democrats labeled it an assault on women and vowed to make it an issue in November's elections.
"It's time that five men on the Supreme Court stop deciding what happens to women," Senate Majority Leader Harry Reid of Nevada said in a Twitter post.
The Affordable Care Act itself didn't specify contraceptives had to be covered. Instead it left it up to the administration to decide what services were "essential" — and the HHS, in a controversial move in 2012, said contraceptives were included on that list.
Dozens of corporations with religiously devout owners sued, arguing the mandate posed an impossible choice: either violate their beliefs or drop health coverage for their employees. If they kept health plans yet flouted the mandate, they faced substantial fines for every day they were in violation.
The court's five conservative-leaning justices held that the Religious Freedom Restoration Act of 1993 protects the family-owned corporations that sued over the rule.
All four members of the court's liberal wing, including its three women, dissented in strong terms.
"In a decision of startling breadth, the court holds that commercial enterprises, including corporations, along with partnerships and sole proprietorships, can opt out of any law (saving only tax laws) they judge incompatible with their sincerely held religious beliefs," Justice Ruth Bader Ginsburg wrote in her dissent.
It is the first time the high court has signaled that for-profit corporations may have religious interests protected under federal law. Yet the majority held that its decision should be limited to contraception and not applied to any law that companies object to on religious grounds.
"The court was very careful to limit the opinion," said Eric Baxter, senior counsel at The Becket Fund for Religious Liberty, which represented Hobby Lobby, a crafts franchise owned by the Green family of Oklahoma.
Yet some analysts worry about the fallout.
"I think the court gives very short shrift to the potential burden on women employees," said B. Jessie Hill, a professor at Case Western Reserve University School of Law. "Though the court suggests that the government should pay for the employees' coverage out of its own pocket, and though it may ultimately end up doing so, there is nothing in the court's opinion that requires — or, ultimately, even gives its blessing to — this solution."
For Democrats, the ruling exposed the politically fraught way in which they pushed the Affordable Care Act through Congress in 2010. The law's framers, in the face of zero Republican votes and a filibuster threat, did not specify whether contraceptives should be covered as essential preventative health care — it came later through administrative rules — or how it would deal with RFRA.
Holly Lynch, a health and ethics expert at Harvard Law School, said she was "not surprised in the least that contraceptives in particular were not covered directly in the ACA."
"It was a political nightmare to begin with [and] adding that into the mix at the time could have completely killed it. Better to push that off temporally a bit, and better to pass the decision about which preventive services should be covered to subject matter experts," she said. "Obviously, it didn't work in the end, but the approach was not a bad one."
White House press secretary Josh Earnest said the administration must examine the court decision but vowed it will take whatever action it can to ensure women are able to access contraceptive services.
"President Obama believes women should make personal health care decisions for themselves rather than their bosses deciding for them. Today's decision jeopardizes the health of women employed by these companies," Mr. Earnest told reporters. "President Obama believes strongly in the freedom of religion ... but we believe the owners of for-profit companies should not be allowed to assert their personal religious views to deny their employees federally mandated benefits."
• Ben Wolfgang contributed to this report.
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