On March 25, the Supreme Court will hear challenges to the Affordable Care Act brought by two for-profit companies: Hobby Lobby of Oklahoma City and Conestoga Wood Specialties of East Earl, Pa. Both companies say it’s a violation of their owners’ religious beliefs to include coverage for contraception as part of their health plans, which they are required to do under the ACA, otherwise known as Obamacare.
The Supreme Court is expected to hand down its final decision on the cases sometime this summer. In the meantime, legal experts predict other challenges to Obamacare could very well make it to the Supreme Court. And many agree this ruling will set a precedent that will start to clarify which companies can claim exceptions under the law and which can’t.
“My hope is that the Court provide-bright line guidance, because what makes it difficult for companies is when there’s uncertainty,” says Brian G. Muse, a partner on the Affordable Care Act team at LeClairRyan in Williamsburg, Va. “Every company should be able to look at their situations and say, ‘Here’s how we’re organized, here’s how we’re managed, so this is what we have to do.’”
First it’s important to understand the provision of the law that’s being challenged in this case. The ACA requires that all companies with more than 50 full-time employees provide health coverage, and that the plans those companies offer include certain essential benefits. Those benefits must encompass a range of preventative healthcare services, among them contraceptives and the “morning after” pill. Companies that violate the mandate to provide those essential benefits could face a fine of $100 per eligible employee per day.
Under the law, only non-profit religious employers, such as churches, can be exempted from covering contraception. But Hobby Lobby and Conestoga Wood contend that they should have the freedom to design their health plans in accordance with their management’s religious tenets.
Muse believes the crux of the case will come down to the Supreme Court deciding if rights provided to non-profits should extend to for-profit companies. “Where the courts have been fairly unanimous is they recognize that corporations cannot take advantage of exceptions to providing contraceptive care based on religious grounds,” Muse says. Still, there’s always a chance the Supreme Court—which hasn’t weighed in on the issue until now—could decide to make an exception for private for-profit companies that are closely held by people with strong religious beliefs, Muse says.
Such a decision could give rise to new challenges for both employers and insurers, says Matthew L. Kinley, a partner at Tredway, Lumsdaine & Doyle in Los Angeles. Because current health plans were designed to comply with the law, insurers are generally not set up to remove certain elements, such as contraception, at the will of individual employers, he says. “This is a practical issue,” Kinley says. “Most companies that buy coverage from [traditional insurers] don’t have the right or the ability to shape what’s in that plan.” Only companies that partially self-fund their health coverage—an option that is now being offered to small employers—would have such freedom to tailor their plans, he says.
So far, the requirement to cover contraceptives is the only challenge to a particular provision in the ACA that has made it all the way up to the Supreme Court, but there could very well be more such lawsuits, especially as companies get closer to their deadlines for complying. Companies with more than 100 full-timers have until next year to get their plans in place, while those with 50 to 99 will need to comply starting in 2016.
Among the most contentious issues that some lawyers predict could end up in courtrooms is the definition of a full-timer, which under the ACA is any employee working more than 30 hours a week. Several groups representing service-based industries such as restaurants, which employ many people who work less than 40 hours a week, are fighting for the definition of a part-timer to be changed to 40 hours.
And there is already pending litigation on the question of whether or not federally run insurance exchanges can provide subsidies to patients who buy plans there. “The law itself says the subsidies are provided by state-run exchanges,” says Ryan Sarni, a lawyer with the Mountain States Employers Council in Denver. On March 25, a federal appeals court will hear arguments on the question of whether the subsidies should also be available in the 36 states where the federal government is running the exchanges because those states declined to set them up themselves.
Sarni expects more issues will bubble up with the continued rollout of Obamacare. “This is one of the biggest changes to our social structure since Medicare,” Sarni says. “So there’s going to be a lot of litigation to sort it out and identify different issues that aren’t so clear.”