Little Sisters: Cato Institute Targets the Affordable Care Act—Yet Again

By Gregory M. Lipper

Fresh off its unsuccessful attempt to gut the Affordable Care Act in King v. Burwell, the Cato Institute is back for more. This time, Cato has filed an amicus brief in support of Supreme Court review in Little Sisters of the Poor Home for the Aged v. Burwell. This is one of the many, many (many) challenges brought under the Religious Freedom Restoration Act (RFRA) by nonprofit organizations to an accommodation, offered by the Department of Health and Human Services (HHS), exempting religious nonprofits from providing contraceptive coverage to their employees. To take advantage of the accommodation, nonprofits need only provide written notice to the government of their objection and the name of their insurance provider or plan administrator. At that point, the government arranges for the nonprofit organization’s insurance company or plan administrator to provide the coverage at no cost to the nonprofit or its employees.

These RFRA challenges to the nonprofit accommodation have been rejected by all seven federal appeals courts to address them. But in this brief backing the challenge by Little Sisters, Cato asks the Supreme Court to dodge the RFRA question entirely, claiming that the case “can be resolved without further engaging in the delicate analysis required by the Religious Freedom Restoration Act.” Instead, Cato makes the following argument: (1) in light of King v. Burwell’s statements about agency deference, HHS had no authority to offer religious accommodations to its own regulations implementing the Affordable Care Act, and (2) without a religious accommodation, the contraceptive coverage requirement is unenforceable against nonprofit organizations with religious objections.

Cato seeks—in the name of religious liberty!—to prevent regulatory agencies from granting accommodations to entities with religious objections to regulations, and then argues that the absence of religious accommodation makes the underlying regulations unenforceable against religious objectors. Cato’s curious argument suffers from two serious flaws.

First, the obvious question: if Cato is correct that HHS is not entitled to grant religious accommodations to the contraceptive coverage regulations, why would Little Sisters nonetheless be exempt from those regulations on religious grounds? According to Cato, once the HHS accommodation leaves the picture, “Hobby Lobby provides the rule of decision and petitioners must be exempted from the mandate.”

Not so fast. The Supreme Court ruled that Hobby Lobby was exempt from covering contraceptives because HHS had already created the nonprofit accommodation and had “provided no reason why the same system cannot be made available when the owners of for-profit corporations have similar religious objections.” This nonprofit accommodation—the one that Cato says that HHS had no authority to offer—was a less restrictive alternative “that achieve[d] all of the Government’s aims while providing greater respect for religious liberty.”

In other words, the Supreme Court said that Hobby Lobby couldn’t be required to provide contraceptive coverage because the nonprofit accommodation was a less-restrictive alternative. Cato now cites Hobby Lobby for the proposition that an exemption is required, but then assumes away the very basis for the Hobby Lobby decision: the nonprofit accommodation was a less restrictive alternative that would ensure that women don’t lose contraceptive coverage.

Consider the following scenario:

Parent, to Hungry Child: “I’m not going to give you lunch because you’re going to eat at Friend’s house.”

Parent, to Friend: “I forbid you to feed Hungry Child.”

Hungry Child, to Parent: “Friend said he was not allowed to feed me. Can I have lunch now?”

Parent, to Hungry Child: “I already told you that I’m not going to feed you.”

Under Cato’s argument, the Parent’s initial statement “supplies the rule of decision” that Hungry Child is not entitled to a meal from Parent, even though Parent’s initial decision depended on the availability of lunch at Friend’s house. Once Friend is no longer allowed to provide lunch, Parent’s original admonition supplies no rule whatsoever, and we’re back to the question of whether and how to ensure that Hungry Child gets to eat.

The same problem dooms Cato’s argument in Little Sisters. If the nonprofit accommodation were no longer available, the Supreme Court would have to go back to square one and consider whether RFRA requires an exemption for objecting employers even if there were no less-restrictive way to ensure that affected women receive contraceptive coverage. Indeed, Hobby Lobby turned on the assumption that “[t]he effect of the HHS-created accommodation on the women employed by Hobby Lobby and the other companies involved in these cases would be precisely zero.” Although Cato’s brief evinces no concern about stripping contraceptive coverage from thousands of women, the Supreme Court in Hobby Lobby did not purport to be so cavalier.

There is a second, more fundamental problem with Cato’s effort to bar administrative agencies from crafting reasonable religious accommodations to agency regulations. Cato’s argument, if accepted, would undermine RFRA’s purpose: to provide religious accommodations, when feasible, from federal statutes and regulations that substantially burden religious exercise. In the modern administrative state, agencies promulgate regulations to implement statutes; Congress could not have devised religious exemptions to those regulations because, by definition, those regulations did not exist at the time Congress enacted the underlying statute. Any religious accommodations from agency regulations, including the contraceptive coverage regulations, would have to come from the agency—or not at all.

After spending ten pages insisting that executive agencies are unequipped to minimize burdens on religious free exercise, Cato flinches: “This is not to say that executive-branch agencies are unequipped to minimize burdens on religious free exercise.” According to Cato’s brief, the problem isn’t that agencies are offering religious accommodations per se. Rather, an agency cannot “justify an authority to craft exemptions that end up relieving the burden on religious liberty for some organizations and not others.”

It’s unclear why Cato thinks that agencies are competent to offer broad exemptions but not narrow ones. In any event, religious accommodations aren’t self-executing: even a broad exemption requires an agency to determine who is eligible and who is not. RFRA doesn’t say “Any person or entity who asserts a religious objection to any federal requirement is entitled to one automatically.” Instead, the statute sets forth specific criteria for determining when exemptions are available and when they are not. Cato, however, would force agencies to choose between a bludgeon and no tools at all, even when the agency would need a scalpel to craft religious accommodations consistent with RFRA.

Later in the brief, Cato claims to sense “an air of déjà vu to this case.” Yes, déjà vu is very much in the air. In King v. Burwell, Cato supported the plaintiffs’ argument that the Affordable Care Act should be interpreted in a manner that would take away health care from over 6 million Americans and create a massive health-insurance death spiral. The Supreme Court rejected this effort and reiterated that “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them.” Now Cato is back with an argument that purports to advance religious liberty; but if accepted, this argument would make it nearly impossible for agencies to offer reasonable accommodations from compliance with regulations that burden religious exercise. Increasingly desperate to undermine the Affordable Care Act, Cato now intends to take down RFRA with it.

Greg Lipper is Senior Litigation Counsel at Americans United for Separation of Church and State. You can follow him on Twitter at @theglipper.