Will the Religious Contraception Mandate Affect Small Business Health Insurance Plans?

On February 10, President Obama announced that his administration was changing its previous stance that religious-affiliated employers must provide employees with access to contraception as part of the Patient Protection and Affordable Care Act. While churches and houses of worship would be exempt from the mandate, all other religiously affiliated organizations (such as religious charities, universities and hospitals) were ordered to comply.

This stance proved to be wildly controversial, drawing the ire of many religious organizations (and the Catholic Church in particular) and providing plenty of fodder for the President’s political opponents.

Insurance Picks Up the Tab

Under the new compromise plan, religious employers like those noted above will no longer be required to offer contraception to employees, nor will they have to refer their employees to contraception providers. Instead, the religious employer’s insurance company must provide contraception directly to employees who ask for it, and they must provide it free of charge, with no co-pays.

For their part, insurance companies have expressed reservations about the new plan. Robert Zirkelbach, a spokesman for the trade group America's Health Insurance Plans, issued the following statement:

“Health plans have long offered contraceptive coverage to employers as part of comprehensive, preventive benefits that aim to improve patient health and reduce health care cost growth. We are concerned about the precedent this proposed rule would set.”

Indeed, this compromise plan leaves a number of key questions unanswered—not only for the religious employers that are directly impacted by it, but for all small businesses. Namely, what might it do to the cost of insurance premiums?

There’s No Free Lunch

Insurers point out that they must pay drug companies that supply birth control pills and doctors who write prescriptions, so there will be costs that they have to absorb. Eventually, these costs will probably be passed on to policyholders, as other requirements of Obamacare have been (like the provision that allows individuals to remain on their parents’ healthcare plans until they’re 26 years old).

So what could be the effect of this mandate on the health insurance coverage you offer to your employees? Right now, it will probably be negligible, if any, unless you run a religious charity, hospital, school or the like. But down the road, it could result in higher health insurance premiums if insurance companies raise rates across the board to help offset the costs of providing “free” contraceptives to employees of religiously affiliated organizations.

Another unknown is how “religious employer” might be defined in the future. For now, the definition is confined to hospitals, schools and charities that are directly affiliated with a particular religion (like Catholicism, for example). But what if a restaurant owner who is a strict Catholic applies to receive the same contraception exemption as Catholic hospitals, schools and charities?

While the new mandate went into effect immediately, its provisions will not be enforced on religiously affiliated organizations that are affected by it until August 2013. This leaves some time for the details to be worked out and some of these questions answered—so stay tuned.