In “Post-ACA World,” Hobby Lobby is “acting partly on behalf of the federal government”

November 30th, 2013

At Balkinzation, Joey Fishkin describes the post-ACA world we now find ourselves. In this world, employers offering health insurance benefits to their employers are not doing so purely as private entities, but as representatives of the federal government’s health care plan.

My aim in this blog post is to make a pretty simple point.  Here it is: As large employers in a post-ACA world, Hobby Lobby and Conestoga Wood Specialties are acting partly on behalf of the federal government, with subsidies from the federal government (as well as extensive regulation), when they offer health insurance to their employees.  Large private employers have been enlisted, by law, as one part of an overall federal project of health insurance provision.  Their role is essential.  Hobby Lobby is the exclusive instrument through which the federal government provides the benefits of the ACA—federally subsidized, affordable insurance—to a set of individuals entitled to the benefits of the ACA (the company’s employees).  That is the key background fact against which one must measure the First Amendment implications—on both the Establishment side and the Free Exercise side—of the special exceptions being sought by large private, for-profit employers with religious owners.

On the face of it, it may seem odd to suggest that a private employer, going about its own business, offering a health plan to its own employees, could at the same time be acting partly on behalf of the federal government or as an instrument of the federal government.  Yet that is exactly what is going on, post-ACA.  To understand why, we need to understand how the ACA works and how it alters the basic setup of the American social welfare state.

This point, stated very clearly by Fishkin is very, very important. The NFIB did more than make health care more affordable or available (assuming those things happen). It changed the relationship between the individual, and the corporation, and the federal government, with respect to a very important element of our economy. Fishkin describes this as a triangle.

These cases are triangle-shaped.  Government, employers, and employees each have an important relationship with each of the other two.  Because of the design of the Affordable Care Act, all of these relationships are implicated in the litigation over the contraceptive mandate and religious exceptions to it.  However, only two corners of the triangle are parties to the litigation: the employers and the government.  Employees are not represented.  This makes it easy to overlook much of the real action.

Before the ACA, arguably, the relationship was only that between the employer and the employee. No employer was required to give health insurance to employees, so they could choose to do so in whatever manner they sought. No longer. The government has an important stake here. And when they are operating, through subsidized benefits, they can dictate certain terms. To Fishkin, this helps to resolve the contraceptive mandate issue. These healthcare benefit are no longer derived merely from the employer, but are seen as an entitlement (a right?) required by the ACA itself.

Now you, as an employee, are being deprived of something to which you would otherwise be entitled under the ACA: affordable health insurance coverage that includes preventive care—without co-pays—for a list of items (spelled out in HHS regulations) that includes the disputed contraceptives.  Everyone else in the U.S. earning $50k/year can have this—whether they’re employed, under-employed, self-employed, etc.*—but not you, because you have the very special bad luck of being an employee of a company with religious owners who object.  As a result, you lose out on an entitlement that was supposed to be universal: affordable insurance coverage that covers a minimum core of preventive care.

This baseline of affordable coverage for all Americans is new.  It is the result of the ACA.  In light of this change, what Hobby Lobby is really seeking is the right to deprive its employees of a basic benefit to which they would otherwise be universally entitled—not as employees, but as Americans.

To Fishkin, the ACA “moved the baseline.”

Why is health insurance different from all other employee benefits?

The answer is the Affordable Care Act.  It moved the baseline.  Pre-ACA, a health plan was just a health plan; it was a benefit employers might or might not offer.  Post-ACA, every American is entitled by federal law to affordable insurance that covers certain things.  Employers have been enlisted as agents in effectuating this new, universal entitlement.

“Enlisted,” a wonderful euphemism for mandate.

Employers have an essential, irreducible role to play in the federal scheme as it exists.

We are now living in the “post-ACA” world. Welcome. And enjoy, because it now affects the First Amendment inquiry.

I understand completely why Hobby Lobby would prefer that the baseline were different, that they were still just an employer going about their own business, rather than being enlisted in a comprehensive federal scheme.  But that ship has sailed; we are entering a new world.  In this new world, Hobby Lobby’s actions implicate the federal government in ways that they did not before.  This situation demands analysis under both of the First Amendment’s clauses—Establishment as well as Free Exercise—and in terms of all three points of the triangle: employees as well as employers and the government.

In June of 2012, before NFIB was decided, I opined that “once “lowering health care costs” is a legitimate governmental purposes, every regulation on individuals can be justified.”

Nothing else is off limits. Everything people do to themselves may at some point increase the cost of their health care. And if the state has a legitimate interest in lower such a cost, there is a legitimate justification for regulations that infringe on individual autonomy–subject only to the restraints in the BIll of Rights.

Once healthcare is viewed as a fundamental entitlement, that employers are required to offer, and employees are required to buy (or else pay a penalty), the government’s ability to mandate and coerce behavior becomes much, much broader. My comment about constraints in the Bill of Rights seems much more prescient, as the contraception mandate case illustrates.

The Hobby Lobby case is unprecedented because never before has Congress compelled private companies to buy such products. Courts have never had to consider such requirements. But the ACA changes everything. Now these products, and host of others are now fair game.We should see much more litigation exploring the contours of this new, ACA-empowered muscle.