More than two dozen other states have similar laws, including Texas, Massachusetts, and New Jersey. Those state laws stick because of the legal reasoning on which the Court based its ruling. Lawyers for Hobby Lobby argued the company could claim religious rights under a federal law, the Religious Freedom Restoration Act, and the First Amendment of the Constitution.
“The Court decided not to rely on the First Amendment claim, but instead to rely on the statutory claim,” says Joel Paul, law professor at U.C. Hastings College of the Law. “That means the decision only applies to federal laws. If a state, like California, requires employers to provide contraceptive coverage, that law survives this decision.”
But there is an exception to the exception. Hobby Lobby is self-insured, meaning the company hires an insurer to manage care, but Hobby Lobby puts up the money to cover its employees’ claims and accepts all liability if the claims end up exceeding the money it initially sets aside.
Companies that self-insure are governed by a federal law known as ERISA, the Employee Retirement Income Security Act. They are not required to comply with state laws, like California’s contraceptive equity act. So Hobby Lobby, which has 26 locations in California, is not required to provide birth control coverage to those employees.
The company did not comment on the details of the state law, but issued a statement saying it was “overjoyed” by the court's decision.
“The nation’s highest court has re-affirmed the vital importance of religious liberty as one of our country's founding principles," said Barbara Green, co-founder of Hobby Lobby.
Most companies in California that choose to self-insure are large, public companies that do not fall into the category of companies the Court’s decision is limited to – "closely held" companies, where half the company is owned by five individuals or fewer.
Janice Rocco, a spokesperson for the California Department of Insurance, said the exact number of companies that fall into both categories - closely held and self insured - is unknown, but expected to be small.
“I’m not sure there would be a huge number of employers availing themselves of this decision,” she said. “At least in California, the applicability of the decision on employers is going to be minimal in terms of there being changes.”
But the California law has gaps and health care advocates plan to use political momentum against the court's ruling to push for further changes in the state law. The contraceptive equity act does not require companies to provide contraceptives at no charge to the patient, the way the Affordable Care Act does. A bill currently working its way through the state legislature would eliminate co-pays and other cost sharing for birth control. It would also prevent insurers from requiring women to “fail” cheaper birth control methods before paying for more expensive ones.
“There's one insurer in California that makes women take oral contraceptive pills for three months before she can get access to the ring, when the ring might be the best method for her,” said Susan Berke Fogel of the National Health Law Program. “Or, others are imposing cost sharing on IUDs [intra-uterine devices], which makes it absolutely unaffordable.”
She believes the Supreme Court decision in Hobby Lobby will embolden California lawmakers to pass the bill.