The U.S. Supreme Court’s suggested work-around to provide and pay for employees’ birth-control coverage at businesses whose owners have religious objections hasn’t worked in practice, say the companies administering it.
While free birth-control coverage is required under Obamacare, the insurance administrators providing it for workers at religious-affiliated groups say the current solution has left them stuck with the bill.
That may be further exacerbated by the court’s ruling, which exempted for-profit, closely held companies whose owners have religious objections, said Mike Ferguson, chief executive officer at the Self-Insured Institute of America, Inc.
“If that is the accommodation the administration chooses, then it would create the same problems, in our view, that are currently in play for the nonprofit religious organizations,” Ferguson said. His Greenville, South Carolina, trade association represents insurance administrators and their clients.
Under the Patient Protection and Affordable Care Act known as Obamacare, insurers and employers offering health benefits are required to cover all U.S.-approved forms of birth control with no out-of-pocket costs. President Barack Obama’ administration carved out an exemption for religious organizations that object. To make sure women got the coverage, outside companies that administer health plans for religious groups were required to pay for it, with government reimbursement to follow.
It’s a complex solution that hasn’t worked in the real world, said the third-party administrators, or TPAs, providing the birth-control benefit, because the government hasn’t figured out how to pay them back.
Without a solution, the benefits administrators may ultimately choose to drop clients with religious objections to covering birth control, Ferguson said. Nonprofits and businesses with religious owners that refuse to cover the benefit would have to change the way they provide health benefits as a result, adding to disruptions from the health-care law.
Obama’s goal of providing free reproductive health services to all women has been met repeatedly by objections from religious groups, their affiliated organizations such as hospitals and universities, and now by private companies whose owners have strong religious beliefs.
The court’s 5-4 ruling June 30 said that closely held, for-profit companies can opt out of providing birth control benefits, the same sort of exemption church-affiliated organizations get. Yet the justices didn’t strike down the requirement that American women have access to birth control. That means that while millions of American women are entitled to coverage, it isn’t clear who will pay for it.
The court held the companies don’t have to comply with the requirement because of a 1993 law, the Religious Freedom Restoration Act. Justice Samuel Alito, who wrote the majority opinion in the case, said one solution could be extending the same accommodation the government has created for religious nonprofits to closely held for-profit companies.
“That accommodation does not impinge on the plaintiff’s religious beliefs that providing insurance coverage for the contraceptives at issue here violates their religion and it still serves HHS’s stated interests,” Alito wrote.
So far the responsibility of making sure the benefit is provided and paid for has fallen to the TPAs.
“There was no budget money set aside for this. There’s certainly no money that is part of the Affordable Care Act appropriations. I can see why the third-party administrators would be concerned,” Amy Gordon, a partner at McDermott, Will and Emery in Chicago who works on health benefits for large employers, said in a phone interview.
Third-party administrators handle billing and other administrative tasks for large employers that insure themselves. They aren’t insurers, although some TPAs are owned by insurance companies, including UnitedHealth Group Inc. (UNH:US)’s subsidiary United Medical Resources and Aetna Inc. (AET:US)’s Meritain Health.
To make sure women employed by religious organizations enjoy the same access to birth control as women working for secular employers, the administration offered two options: the TPAs for religious groups could find an insurer willing to cover contraception for their nonprofit clients’ workers; or the TPAs could pay for birth control themselves and find an insurer as a partner using the federal health exchange.
The government would then rebate user fees to the insurer, which would pass the money on to the TPA to cover the cost of birth control. The Department of Health and Human Services has said it doesn’t know how many religious groups would take advantage of the arrangement or how many TPAs would have to administer it.
“This was a political objective that was being put out by the White House that was put on the shoulders of HHS,” Ferguson said. “They said, ’You guys figure it out,’ essentially.”
While the system may work for TPAs that are owned by insurers, Ferguson said that no independent TPA -- there are more than 300 in the U.S. -- has found an insurer willing to join with it. Since the birth-control benefit began Jan. 1, the costs to independent TPAs are potentially in the millions of dollars, he said, with no certainty they’ll ever be paid back.
Ferguson’s association asked the health department in a February letter to pay the TPAs directly; the agency doesn’t believe it has legal authority to do that, he said. He said he plans to raise the issue with the government again this week.
Spokesmen for UnitedHealth and Aetna declined to comment. Aaron Albright, a spokesman for the Centers for Medicare and Medicaid Services, which administers the Affordable Care Act, said he wasn’t able to immediately comment on the complications Ferguson outlined.
Executives at five independent TPAs contacted for this story didn’t return phone messages.
The Supreme Court’s decision came on behalf of two companies that had sued over the birth-control requirement, Hobby Lobby Stores Inc. and Conestoga Wood Specialties Corp. While both closely held companies’ health plans cover most contraceptives, their owners refuse to pay for Teva Pharmaceutical Industries Ltd. (TEVA:US)’s Plan B One-Step and Actavis Plc (ACT:US)’s Ella, as well as some intrauterine devices, which they believe can cause abortions.
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