American Journal of Law & Medicine

Religious Exemptions to the PPACA's Health Insurance Mandate

CONTENTS    I. INTRODUCTION  II. ANALYSIS OF THE PPACA RELIGIOUS CONSCIENCE EXEMPTION IN      LIGHT OF THE SOCIAL SECURITY PROGRAM      A. The Existing Religious Conscience Exemption from         the Social Security Program      B. Legislative Purpose: Distinguishing the PPACA from         the SSA III. THE CONSTITUTIONALITY OF THE RELIGIOUS CONSCIENCE      EXEMPTION AS CURRENTLY WRITTEN      A. The PPACA is a Neutral, Generally Applicable Federal          Law that Incidentally Burdens Religion      B. The Potential Application of RFRA to the PPACA      C. Potential Establishment Clause Concerns with the Religious         Conscience Exemption      D. The PPACA Likely Does Not Violate the         Free Exercise Clause  IV. EFFECT OF THE RELIGIOUS CONSCIENCE EXEMPTION ON      THE PPACA      A. The Religious Conscience Exemption Interferes with         Three of the Act's Purposes      B. The Religious Conscience Exemption is Not Needed for the         PPACA to be Constitutional      C. The Health Care Sharing Ministry Exemption, Properly         Regulated, Better Protects the Values Underlying the PPACA   V. CONCLUSION 


Arguably the most controversial change to the U.S. healthcare system written into the Patient Protection and Affordable Care Act (1) ("PPACA" or the "Act") is what has been colorfully termed the Act's "individual mandate," the provision that establishes tax penalties for those who do not maintain health insurance in 2014 and beyond. (2) Though the health insurance mandate does not go into effect until 2014, it has already faced numerous constitutional challenges in district and circuit courts, with entirely inconsistent results. (3) Conflicting decisions regarding the Act's constitutionality at the circuit court level cry out for Supreme Court review. But while the individual mandate's validity under either the Commerce Clause or Congress's taxing power has been the focal point of litigation thus far, another aspect of the individual mandate may undermine the goal of establishing universal, affordable healthcare coverage for all Americans. As currently written, the religious conscience exemption from the PPACA's individual mandate threatens the efficacy of the Act and potentially exposes it to legal challenges under the Constitution's Religion Clauses. (4)

In addition to establishing tax penalties for those who do not maintain "minimum essential coverage," section 1501 of the PPACA also creates exemptions from those penalties. (5) Under the heading "religious exemptions," the Act sets out two distinct categories of individuals who are exempt from the tax: those with a "religious conscience" objection to insurance and those who are members of a "health care sharing ministry." (6) The religious conscience exemption applies to anyone who is "a member of a recognized religious sect or division thereof described in [section] 1402(g)(1) [of the Internal Revenue Code]" and meets the additional requirements laid out in that section. (7) The additional requirements limit the exemption to (1) sects that "make provision[s] for their dependent members which [are] reasonable in view of their general level of living," and (2) sects that have "been in existence at all times since December 31, 1950." (8) These requirements and the history behind their creation are discussed in Part II.A., infra. An individual who

meets the requirements of the religious conscience exemption is entirely immune from the tax penalties associated with the individual mandate.

For those who do not qualify for the religious conscience exemption but nonetheless object to having health insurance for religious reasons, (9) the health care sharing ministry exemption allows an individual to avoid the section 1501 tax penalty by proving membership in a qualifying health care sharing ministry. (10) The idea is that these ministries are groups of like-minded, religious individuals who agree to help pay for each others' medical expenses, thus avoiding the religious objection that some have to mandatory health insurance. (11) Within the PPACA, this alternative religious exemption is defined by reference to section 501(c)(3) of the Internal Revenue Code of 1986 (the "IRC"), which includes:

   Corporations, and any community chest, fund, or foundation,    organized and operated exclusively for religious ... [and certain    other] purposes ... no part of the net earnings of which inures to    the benefit of any private shareholder or individual, no    substantial part of the activities of which is carrying on    propaganda, or otherwise attempting, to influence legislation ...    and which does not participate in, or intervene in ... any    political campaign.... (12) 

The exemption goes on to require that a qualifying health care sharing ministry:

(II) [has members] which share a common set of ethical or religious beliefs and share medical expenses among members in accordance with those beliefs....

(III) [ensures that members can] retain membership even after developing a medical condition,

(IV) has been in existence [or a predecessor of which has been in existence] at all times since December 31, 1999....

(V) ... conducts an annual audit which is performed by an independent certified public accounting firm in accordance with generally accepted accounting principles and which is available to the public upon request. (13)

There are no additional requirements or guidelines with respect to how a qualifying health care sharing ministry must share medical expenses among its members. As such, the health care sharing ministry exemption contains a peculiar combination of strict requirements (e.g., only corporations, community chests, funds, or foundations, operated for exclusively religious purposes and having been in existence prior to 2000) with very general requirements (e.g., members must have a shared belief system and share medical expenses). In essence, the exemption prohibits any religious group from creating a new program to share healthcare costs among its members in response to the enactment of the PPACA, while welcoming any religious group that has shared medical costs between its members at all times since December 1999, no matter how or to what extent it shared those costs. Examples of existing health care sharing ministries and a discussion of their basic function can be found in Part IV.C, infra.

With the implementation date of the PPACA's health insurance mandate still years away, religious organizations and others with more general ideological objections to the Act are already raising questions as to whom these religious exemptions will apply. (14) Some religious individuals have already brought a constitutional challenge to the PPACA's religious exemption clauses, (15) though of course the true scope of the exemptions' coverage will not be known until they go into effect in 2014. In this Note, I argue that as currently written, the religious conscience exemption from the PPACA health insurance mandate needlessly exposes the Act to potential constitutional challenges and significantly undermines the efficacy of the individual mandate while providing protection to those with a religious objection that is both needlessly restrictive and redundant. If properly regulated, health care sharing ministries offer sufficient protection to all groups with religious objections to the individual mandate while better preserving the underlying principles that fueled the enactment of the PPACA.

Because the religious conscience exemption language in the PPACA refers directly to the religious exemption requirements written into the Social Security Act of 1965 (the "SSA"), (16) in Part II, I explore how religious exemptions have been applied to Medicare and Medicaid, and to what extent those exemptions have interfered with the underlying purposes behind the Social Security program. I also contrast the legislative purposes that fueled the passage of the SSA to those that fueled the passage of the PPACA.

In Part III, I explore the background information needed to best understand why the religious conscience exemption from the health insurance mandate was drafted as it currently appears in the Act. First, I identify the PPACA as a "neutral," "generally applicable" federal law that "incidentally burdens" the free exercise of religion and discuss the meaning of these three terms. Second, I identify the circumstances under which the Religious Freedom Restoration Act (the "RFRA") may apply to the PPACA and the implications of its application. Third, I explore potential Establishment Clause (17) problems with the religious conscience exemption as currently written. Finally, I argue that while the religious conscience exemption raises some concerns as to its general applicability to religious groups, the exemption as currently written would not violate the Free Exercise Clause. (18)

In Part IV, I turn to the broader implications of including the religious conscience exemption within the PPACA. First, I argue that the exemption interferes with three of the purposes underlying the Act. Second, I argue that even without the religious conscience exemption, the PPACA would likely survive strict scrutiny review under the RFRA. Third, I argue that relying on the health care sharing ministry exemption alone, with proper regulation, would better serve the underlying purposes behind the PPACA. I conclude by arguing that the religious conscience exemption should be stricken from the Act for the reasons set forth herein.



Section 1501 of the PPACA amends the IRC by adding in a "requirement to maintain minimum essential coverage." (19) The requirement dictates that starting in 2014, for each month in which an applicable individual fails to maintain minimum essential coverage--meaning membership in some recognized health plan (20)--that individual will be assessed a tax penalty. (21) An "applicable individual" is defined as any individual other than one who has a religious exemption, one who is not a citizen, national, or lawful alien of the United States, or one who is incarcerated. (22) Individuals who cannot afford coverage are also exempted. (23)

The language of the section 1501 religious conscience exemption, codified in section 5000A of the IRC, cites directly to the existing religious exemption in the SSA. (24) The religious exemption to the Social Security program--which covers taxes generated for use by both Medicaid and Medicare--is based on the following statutory language found in section 1402(g) of the IRC, under the heading "members of certain religious faiths":

   Any individual may file an application ... for an exemption from    the tax imposed by this chapter if he is a member of a recognized    religious sect or division thereof and is an adherent of    established tenets or teachings of such sect or division by reason    of which he is conscientiously opposed to acceptance of the    benefits of any private or public insurance which makes payments in    the event of death, disability, old-age, or retirement or makes    payments toward the cost of, or provides services for, medical care    (including the benefits of any insurance system established by the    Social Security Act). (25) 

The IRC goes on to say that an application for a religious exemption must contain or be accompanied by:

(A) [evidence of the individual's membership in the religious sect and adherence to its relevant tenets or teachings], and

(B) [the individual's waiver of all benefits from the Social Security program],

and only if the Commissioner of Social Security finds that (C) such sect or division thereof has the established tenets or teachings referred to in the preceding sentence,

(D) it is the practice, and has been for a period of time which he deems to be substantial, for members of such sect or division thereof to make provision for their dependent members which in his judgment is reasonable in view of their general level of living, and

(E) such sect or division thereof has been in existence at all times since December 31, 1950. (26)

Requirements (A) and (C), along with the sentence that precedes them, lay out the logical elements for a religious conscience exemption. The individual must be a member of, and follow the teachings of, a religious sect that is conscientiously opposed to insurance. These two requirements are written directly into the religious conscience exemption from the individual mandate. (27) Requirement (B) merely ensures that the exempted individual is removed from the Social Security program, a requirement that is unrelated to, and was therefore omitted from, the PPACA exemption. The last two requirements, (D) and (E), are the specific requirements that a religious sect or division must meet in order for its members to have access to the religious conscience exemption. The history leading up to the addition of this exemption to the SSA gives context to requirements (D) and (E), which were most likely added to limit the potential beneficiaries of the exemption to the Old Order Amish and any substantially similar religious group. The exemption was added into the IRC after a ten-year battle between Congress and the Amish over payment of Social Security taxes. (28)

While no U.S. court has directly ruled on whether an Amish religious conscience exemption from the SSA is required by the Free Exercise Clause, United States v. Lee all but answered the question in the negative. (29) Writing for a unanimous court, Chief Justice Burger held that the Constitution did not require an expansion of the existing religious conscience exemption to include Amish small business owners and their employees. (30) The Court stated that the government "may justify a limitation on religious liberty by showing that it is essential to accomplish an overriding governmental interest." (31) First, the Court found that compulsory payment of Social Security taxes interfered with Amish free exercise. (32) The overriding government interest in this case was the interest in "providing a comprehensive insurance system" to those who qualify for the Social Security program. (33) Finally, the Court addressed "whether accommodating the Amish belief [would] unduly interfere with fulfillment of the governmental interest." (34) It concluded that accommodation would unduly interfere because, as a "cosmopolitan nation made up of people of almost every conceivable religious preference," it would be difficult to administer a comprehensive Social Security program while accommodating the "myriad exceptions flowing from a wide variety of religious beliefs." (35) The Court also noted that "[t]here is no principled way ... to distinguish between general taxes and those imposed under the Social Security Act," and that "[t]he tax system could not function if denominations were allowed to challenge the tax system because tax payments were spent in a manner that violates their religious belief." (36)

Were the case tried today under the standard of review required by the RFRA, the outcome would likely be the same, though it would be a close call. The Court in Lee describes maintaining a viable tax system as a "high order" interest, (37) which is likely the same as a "compelling" governmental interest under the RFRA's strict scrutiny review. (38) It is less likely that the government could demonstrate that it used the least restrictive means to achieve its goal, since "[a]s a matter of administration, it would be a relatively simple matter to extend the exemption to [Amish small business owners and their employees]." (39) As discussed in Part IV.B., infra, however, the RFRA cannot be read to require every plausible exemption to be written into a piece of legislation before it can be considered constitutional. In reality, "United States v. Lee Part II" will never be heard, since Congress responded to Lee with the Exemption Act of 1988, which explicitly grants religious conscience exemptions to "employers and their employees where both are members of religious faiths opposed to participation in Social Security Act programs. …

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