By ROBERT PEAR
Published: February 1, 2013
“WASHINGTON — The Obama administration on Friday proposed yet another compromise to address strenuous objections from religious organizations about a policy requiring health insurance plans to provide free contraceptives, but the change did not end the political furor or legal fight over the issue.
The proposal could expand the number of groups that do not need to pay directly for birth control coverage, encompassing not only churches and other religious organizations, but also some religiously affiliated hospitals, universities and social service agencies. Health insurance companies would pay for the coverage.
The latest proposed change is the third in the last 15 months, all announced on Fridays, as President Obama has struggled to balance women’s rights, health care and religious liberty. Legal experts said the fight could end up in the Supreme Court.
Kathleen Sebelius, the secretary of health and human services, said the proposal would guarantee free coverage of birth control “while respecting religious concerns.”
But Kyle Duncan, the general counsel of the Becket Fund for Religious Liberty in Washington, which is representing employers in eight lawsuits, said the litigation would continue. “Today’s proposed rule does nothing to protect the religious freedom of millions of Americans,” Mr. Duncan said.
Religious groups dissatisfied with the new proposal want a broader, more explicit exemption for religious organizations and protection for secular businesses owned by people with religious objections to contraceptive coverage.
The tortured history of the rule has played out in several chapters. The Obama administration first issued standards requiring insurers to cover contraceptives for women in August 2011, less than a month after receiving recommendations to that effect from the National Academy of Sciences. In January 2012, the administration rejected a broad exemption sought by the Roman Catholic Church for insurance provided by Catholic hospitals, colleges and charities. After a firestorm of criticism from Catholic bishops and Republican lawmakers, the administration offered a possible compromise that February. But it left many questions unanswered and did not say how coverage would be provided for self-insured religious organizations.
Under the new proposal, churches and nonprofit religious organizations that object to providing birth control coverage on religious grounds would not have to pay for it.
Female employees could get free contraceptive coverage through a separate plan that would be provided by a health insurer. Institutions objecting to the coverage would not pay for the contraceptives.
Insurance companies would bear the cost of providing the separate coverage, with the possibility of recouping the costs through lower health care expenses resulting in part from fewer births.
Chiquita Brooks-LaSure, who helped develop the proposal as deputy director of the federal office that regulates health insurance, said: “Under the proposed rule, insurance companies — not churches or other religious organizations — will cover contraceptive services. No nonprofit religious institution will be forced to pay for or provide contraceptive coverage, and churches and houses of worship are specifically exempt.”
Moreover, she said, “Nonprofit religious organizations like universities, hospitals or charities with religious objections won’t have to arrange, contract or pay for coverage of these services for their employees or students.”
But some of the lawsuits objecting to the plan have been filed by businesses owned by people who say they have religious reasons for not wanting to provide contraceptive coverage. Under the proposed rule, “for-profit secular employers” would have to provide birth control coverage to employees, even if the business owners had a religious objection to the idea.
Insurers said they were studying the proposal, but had questions about how it would work. Many insurers asked where they would get the money to pay for birth control pills if — as the proposed rule says — they cannot “impose any premium, fee or other charge” for the coverage. The 2010 health care law generally requires employers to provide women with coverage at no cost for “preventive care and screenings,” which the administration says must include contraceptives for women under most health plans.
The administration says employers must cover sterilization and the full range of contraceptive methods approved by the Food and Drug Administration, including emergency contraceptive pills, like those known as ella and Plan B One-Step. Employers that do not provide such coverage will be subject to financial penalties.
On Friday, the administration proposed a complicated arrangement to finance contraceptive coverage for employees of religious organizations that serve as their own insurers. The federal government would require health insurance companies to help defray the cost. In return, the insurers would get a credit against the fees they pay for the privilege of selling health insurance to millions of Americans in new online markets run by the federal government.
The government was already planning to charge user fees to the insurers to pay for the operation of those marketplaces, known as insurance exchanges.
Ms. Brooks-LaSure said the user fees were “not a cost to the federal government or to taxpayers.” Rather, she said, the fees are “private dollars paid by private insurers that choose to operate in the exchanges.”
Insurers said, however, that the cost of user fees, like other expenses, would often be passed on to consumers.
The proposal also said insurers could not impose any annual or lifetime limits on the dollar value of contraceptive benefits. But the administration added that “the cost of the contraceptive coverage could include a reasonable margin,” or profit, for insurers.
Administration officials tried to address some objections on Friday by proposing a new definition of “religious employers” that could be exempted from the requirement to provide contraceptive coverage.
The administration affirmed that the exemption would apply to churches and other houses of worship and that it would also be available to certain affiliated nonprofit groups that certify, in writing, that they have religious objections to such coverage.
Now, under the proposal, the administration said, “a house of worship would not be excluded from the exemption because, for example, it provides charitable social services to persons of different religious faiths or employs persons of different religious faiths.”
The administration had previously agreed to allow exemptions for some religious employers. But church groups said the exemption was so narrow that it was almost meaningless. Previously, a religious employer could not have qualified for the exemption if it employed or served large numbers of people of a different faith, as many Catholic hospitals, universities and social service agencies do.
Stephen F. Schneck, the director of the Institute for Policy Research and Catholic Studies at the Catholic University of America in Washington, said, “The revised definition is an important win for religious institutions because it clarifies conscience protections for entities like Catholic hospitals, charities and universities.” Mr. Schneck was a leader of Catholics for Obama last year.
The administration said that the new definition, though simpler, “would not expand the universe of employer plans that would qualify for the exemption beyond that which was intended” in final rules issued last year.
Reaction was wide ranging. Cecile Richards, the president of the Planned Parenthood Federation of America, said the policy affirmed that “your boss does not get to decide whether you can have birth control.”
But Representative Christopher H. Smith, Republican of New Jersey and co-chairman of the Pro-Life Caucus in Congress, said the proposal represented “neither an accommodation nor a compromise” and provided “no relief for small businesses run by people of faith.””