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The Hobby Lobby Ruling: What you need to know and how it could affect your health insurance exchange future

July 7th, 2014

Hobby Lobby

Credit: Nicholas Eckhart via Flickr under Creative Commons

Since last month’s Supreme Court ruling on the controversial Hobby Lobby vs. the Affordable Care Act case, the internet has been ablaze with speculation as to what it means for the future of the ACA and health insurance in the United States. While it’s certainly premature to declare the ruling a disaster, it does set and important precedent that could potentially impact millions of Americans’ health care choices.

Hobby Lobby and health insurance exchanges

In case you haven’t heard the news, on June 30 the Supreme Court ruled against the Obama administration in the case of Burwell v Hobby Lobby Stores, Inc. The ruling now allows for family owned (“closely held”) companies to opt out of offering their employees certain forms of birth control if it conflicts with their religiously held beliefs. The lawsuit slowly wound its way through the federal court system last year before the Supreme Court agreed to hear it.

The case was brought by two Christian families who own national businesses and claim that certain forms of FDA approved birth control, including the so-called “morning after pill” are tantamount to abortion and violate their religious beliefs. The two families in question are the Greens who own both Hobby Lobby, a craft store chain, and Mardel, a religious bookstore. The other family is the Hahns who own the cabinetmaker Conestoga Wood Specialties.

The Affordable Care Act requires all businesses with 50 or more employees to provide their workers with a comprehensive health insurance option. Comprehensive here is defined as a health insurance plan that provides coverage in all categories of the ACA’s Essential Health Benefits.

These essential health benefits are 10 categories of health services that all health insurance plans under the ACA must provide coverage for. One of those categories is women’s health services, and specifically mandated in that category is coverage for all FDA approved versions of birth control, which includes the morning after pill.

Hobby Lobby brought the suit to challenge this mandate. They argued that the federal government forcing the company to provide a medication that went against its religious beliefs, violated their first amendment rights. The Supreme Court’s ruling found that “closely held” companies (such as Hobby Lobby) could refuse to provide coverage for medical treatment that violated their religious beliefs.

What does this mean for your health insurance future?

Regardless of whether you believe it was the right decision by the court or not, the decision has important implications for health insurance in the U.S.

For a majority of Americans the ruling in the Hobby Lobby case will likely not impact them directly. At the moment only those firms regarded as “closely held” by the federal government are eligible to receive the same religious exemption from parts of the ACA as the plaintiffs in the Hobby Lobby case. However the term “closely held” is not very well defined, and thus vulnerable to possible abuse by companies looking for an ACA exemption.

The employer health insurance mandate

It’s also worth noting that the Hobby Lobby ruling only impacts those companies that are big enough to be subject to the ACA’s employer mandate. Starting in 2015 the ACA requires that all business with at 50 or more full-time employees (working at least 30 hours a week) provide them with a comprehensive health insurance option that also falls into a certain range of affordability.

Hobby Lobby’s main objection is that it was being forced to provide this health insurance in a way that it did not agree with. Had the company been small enough to not be subject to the employer mandate, one can make the argument that it would have simply opted to not offer any health insurance coverage at all. Instead their employees could have sought out and purchased a health insurance policy at their state’s rspective health insurance exchange or the federal health insurance exchange at HealthCare.gov.

A health insurance precedent

However regardless of whether the ruling will have an immediate impact on your health insurance options it does set a precedent. A precedent that could be potentially harmful to employees working at religious for-profit companies. What if your employer doesn’t believe in blood transfusions, or vaccines? Will they still be able to claim religious exemption at that point?

Going forward the implementation of the ruling is sure to be a bit rocky. Not to mention there are still a few murky aspects of the ruling to work out, like a hard and fast definition of a “closely held” company. According to news outlets there are already several countersuits in the works, so it’s unlikely this is last we’ll hear on the issue.