Bench Memos

Substantial Confusion on RFRA’s “Substantial Burden” Requirement?

On the Balkinization blog, Georgetown law professor Marty Lederman is writing a series of very lengthy posts setting forth his grounds for believing that the private employers’ religious-liberty challenges to the HHS mandate should be rejected.

In one post, Lederman spells out that Obamacare does not actually impose a legal duty on large employers to provide their employees access to a qualifying health-insurance plan and that it instead subjects them to an annual tax of (roughly) $2000 per employee if they fail to provide such access. Lederman acknowledges that the imposition of a legal duty is not necessary to trigger religious-liberty protections under the Religious Freedom Restoration Act and that such protections exist when the federal government has placed “substantial pressure” on an exercise of religion. But, from his ivory-tower perch, he argues that “it’s almost certain that Hobby Lobby”—and “most employers”—“would benefit economically” (his italics) by dropping health-insurance coverage and instead paying the tax.

In a follow-up post, Lederman addresses the “obvious question—namely, if I am right, then why aren’t most employers dropping their employee health insurance plans?” Revising his position, Lederman argues that “any pressure on employers to retain their insurance plans … is based on a complex array of factors, most of which are market-driven rather than compelled by law.” In his analysis, if federal law isn’t placing substantial pressure on employers to provide health insurance, any burden that the HHS mandate places on objecting employers who do provide health insurance is very weak. (I’m trying to summarize succinctly the relevant portions of a 5,000+-word post; I invite interested readers to read the whole post.)

Some comments and criticisms:

1. Lederman’s account of the role that federal law plays in pressuring employers to provide health insurance strikes me as one-sided and misleading.

Early on, Lederman says that the “widespread employer practice” of providing health insurance “has been primarily attributable to two things”: (a) “a federal government subsidy to employees” (emphasis omitted), and (b) the fact that “the insurance the employees could obtain on the open market, using their own wages, was not nearly as attractive as employer-provided insurance.” Lederman attributes only the first factor to federal law. He fails to consider that the second factor almost surely flows directly from the first: As health-care expert Jim Capretta (my colleague at the Ethics and Public Policy Center) tells me, the primary reason that the market for individual insurance hasn’t been as attractive is that the subsidy (to the employee) for employer-provided insurance means that the individual market is generally used only by those who don’t have access to an employer plan. In other words, it is a much smaller, remnant market, and thus less stable than the employer market, and the main reason is federal tax policy.

So once this second factor is correctly understood, Lederman’s own account means that it is federal law that is “primarily” responsible for the prevalence of employer-provided insurance. Federal law, in other words, clearly places substantial pressure on Hobby Lobby and other employers to provide health insurance in order to stay competitive in attracting employees, and it thus subjects them to the particular burden that the HHS mandate imposes on those employers who do provide such insurance.

I’ll note that, if I’ve digested all the relevant passages, Lederman doesn’t in fact make the opposite claim—that federal law isn’t primarily responsible for the prevalence of employer-provided insurance. Instead, he states only that

even if it were true … that most employers will retain their employee insurance plans …, that would not necessarily mean that most or all such employers are substantially pressured to do so, let alone that federal law creates such substantial pressure. It might be, instead, that most employers have soft preferences to retain such plans, owing to a vast array of variables and considerations.[Emphases in original.]

Similarly, when he says that “any pressure on employers to retain their insurance plans … is based on a complex array of factors, most of which are market-driven rather than compelled by law,” he is contending only that “most of” the factors are “market-driven”—which is not the same as contending that most of the pressure is “market-driven.” It’s unfortunate that his phrasing might mislead many readers.

2. If I’m right on point 1, then Lederman’s argument in his post collapses. But I also contest the fundamental premise of his argument.

For Lederman, it’s not enough, for purposes of the “substantial burden” inquiry under RFRA, that the HHS mandate applies to objecting large employers who provide health insurance. It’s somehow necessary as well that federal law place substantial pressure on those employers to provide insurance.

But why? If Lederman is right, then why isn’t it also necessary to establish that federal law places substantial pressure on those employers to be in business in the first place? Or to do business in the United States? Or to hire enough employees to pass the “large employer” threshold?

In the landmark case of Sherbert v. Verner, state law didn’t require that Adell Sherbert seek employment at all; it merely conditioned her receipt of unemployment compensation on her willingness to accept a job that required her to work on Saturdays. If Lederman is right, why didn’t the Supreme Court require her to establish that state laws (rather than what Lederman calls “a wide array of very context-dependent and fact-specific factors”) placed substantial pressure on her to work? Are we really to believe that her Free Exercise claim would have failed if, say, she was from a wealthy family and, by some objective standard, was under no pressure to work (but in fact did want to)? If Lederman is right, why didn’t the Court explore whether state laws, rather than market conditions, were primarily responsible for employers’ insistence that she be available to work on Saturdays?

Or consider this hypothetical: A newly enacted federal law requires that any store that sells beef to the public must also sell comparable pork products. The owner of a kosher deli charges that the law violates his rights under RFRA. In determining whether the law imposes a substantial burden on the owner’s exercise of religion, would a court really find it significant that federal law does not require the deli owner to sell beef? If that proposition strikes you as absurd, that would signal that Lederman’s premise (that it matters why an employer is providing health insurance) is also absurd.

What I’m suggesting is the modest proposition that people have religious-liberty rights under RFRA in how they carry out all the activities that they freely choose to engage in, not just in how they do the tasks that the federal government places substantial pressure on them to do. The kosher deli is free to sell beef, and Hobby Lobby is free to provide health insurance to its employees—and in both cases the federal government substantially burdens the entity’s exercise of religion when it compels it to carry out that freely chosen activity in a way that violates its religious beliefs.

In sum, I believe that Lederman’s post invents, and then stumbles over, a hurdle that RFRA does not in fact impose.

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