Why dropping health insurance is no solution for Hobby Lobby

Long-time Power Line reader Michael McConnell, a (if not the) leading scholar of the Constitution’s Religion Clauses, analyzes the four serious legal issues presented in the Hobby Lobby case. The issues are:

(1) Could Hobby Lobby avoid a substantial burden on its religious exercise by dropping health insurance and paying fines of $2,000 per employee?

(2) Does the government have a compelling interest in protecting the statutory rights of Hobby Lobby’s employees?

(3) Would a ruling in favor of Hobby Lobby give rise to a slippery slope of exemptions from vaccines, minimum wage laws, anti-discrimination laws, and the like?

(4) Has the government satisfied the least restrictive means test?

I will summarize McConnell’s answer to the first question, while urging you to read the whole thing.

Justices Sotomayor, Kagan, and Kennedy asked several questions about whether Hobby Lobby could avoid a substantial burden on its religious exercise by dropping insurance altogether and paying an annual “tax” of $2,000 per employee. Some have suggested that exercising this option would actually save the company money.

But the government never raised this argument, and for good reason. As McConnell shows, it is wrong both in principle and on the facts.

First, the owners of Hobby Lobby assert that their decision to treat employees well by offering them health insurance is religiously based. According to McConnell, the government has not disputed this assertion.

Second, the right of an employer to provide health insurance coverage for its employees is valuable apart from religious considerations. For one thing, providing this benefit makes the employer more attractive to employees and prospective employees. As McConnell points out, “if employers were better off dropping insurance coverage and paying the “tax,” we would expect many large employers to do so. That has not happened—which confirms the common-sense conclusion that dropping insurance coverage is bad for employees and bad for business.”

Finally, it would be wrong to conclude that Hobby Lobby could save money by dropping its employees’ health insurance plan:

if Hobby Lobby drops insurance, it would not simply pay a $2,000 “tax.” Requiring it to cease providing insurance would cause massive disruption to Hobby Lobby’s employees, major uncertainty for its business, and cost millions of dollars in taxes and salaries beyond what it was previously paying just for insurance.

It is easy to see how imposing such a choice constitutes a substantial burden—which is likely why the government never raised the issue, and the courts of appeals never considered it.

McConnell’s arguments regarding the other three legal issues are equally powerful. So again, I urge you to read the whole thing.


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