A women’s rights victory as California nixes an attack on abortion coverage

With minimal fanfare, California state officials have nixed an underhanded effort by two Catholic-affiliated universities and their insurers to deprive the universities’ employees of insurance coverage for abortions.

The move by the Department of Managed Health Care is one of the strongest statements in favor of women’s reproductive health rights you’re likely to hear from officials of any state, at a time when those rights are under systematic attack. So it’s proper to pay attention.

On Friday, the DMHC informed the state’s major health insurers by letter that provisions in health plans eliminating coverage of “voluntary” or “elective” abortions, or limiting coverage only to “medically necessary” abortions, violate state law and the state constitution.

A copy of the letter--this version sent to Anthem Blue Cross--can be found here. It says health plans in California are prohibited from “discriminating against women who choose to terminate a pregnancy. Thus, all health plans must treat maternity services and legal abortion neutrally.”

DMHC director Michelle Rouillard ordered such “discriminatory coverage exclusions and limitations” to be stricken from the health plans immediately.

Although the DMHC letter went out to more than a half-dozen insurance companies, the real targets were two: Anthem Blue Cross and Kaiser. That’s because those carriers had worked with Loyola Marymount University and Santa Clara University, which are both Jesuit-affiliated, to create health plans dropping abortion coverage for employees.

According to California Lawyer magazine, Anthem quietly obtained approval from the DMHC in 2008 to make such changes. Kaiser Permanente told the magazine it won approval in 2012 “to market a plan excluding abortions deemed not ‘medically necessary’ even to non-Catholic clients.

The effort became public only after Loyola Marymount started implementing the changes in 2013. The dropping of abortion coverage created an uproar among faculty on the Los Angeles campus, not least because of the vagueness of the provision’s language: coverage was to remain in place only for “therapeutic” abortions, a term that ostensibly meant those deemed medically necessary.

But that term appears nowhere in California law. The state’s Therapeutic Abortion Act was overturned by the state Supreme Court in 1972, and supplanted by the Reproductive Privacy Act in 2003. As is explained by Stephen F. Diamond, a Santa Clara University law professor who has followed the controversy closely, the latter law “guarantees a woman’s right to both terminate a pregnancy and to birth control.”

California law doesn’t recognize the terms “medically necessary,” “elective” or “voluntary” as they apply to abortions, the DMHC letter observes. The only abortions performed by a medical professional that are outlawed in California, and thus not eligible for insurance coverage, are those performed after a fetus is viable.

The state Department of Insurance, which has jurisdiction over non-managed care individual and small-group plans, says it agrees with the DMHC’s interpretation of the law. Over the last year or so, some insurance companies have submitted proposed insurance plans incorporating abortion coverage limits, Deputy Insurance Commissioner Janice Rocco told us. The agency rejected them and instructed the firms to remove the limitations, she said.

Rouillard’s letter to the insurance companies indicates that the 2008 Anthem and Kaiser plans were “erroneously approved.” She doesn’t say so specifically, but that was done originally by her predecessors under Gov. Arnold Schwarzenegger. But DMHC officials under Gov. Jerry Brown appear to have approved the sale of plans for limited abortion coverage to even non-religious clients.

The plans originally approved by the DMHC, Diamond says, would have dropped coverage for most contraceptives as well as abortions. The plan implemented at Loyola last year, however, retained contraceptive coverage.

Loyola said Friday, “We have asked our insurers what this reported new decision means in terms of making sure that our current plans comply with the law.” Santa Clara University states similarly that it has “reached out to its insurers” and “will confer with them to ensure that our health plans continue to be fully compliant with state and federal law.”

The proposed changes also created an uproar on that Northern California campus, driving a wedge between the faculty and administration. Things got worse, according to California Lawyer magazine, when the university president, Michael Engh, declared that although abortion coverage would remain in place through the end of this year, “Santa Clara University cannot be true to its Jesuit Catholic identity and willingly offer, through its health care programs, financial support to a woman seeking an abortion that is not medically necessary.”

Diamond says the DMHC action is a significant victory for abortion rights in California. In part that’s because “it’s unusual to get an agency to admit it was wrong,” he says. But more importantly, “there was the risk that this could spread beyond our two campuses, that it would open a loophole to employers only dimly connected to the Catholic Church.”

That’s a key point because California’s standard for granting employers a religious exemption from certain laws has been admirably clear and direct--in contrast to the muddled rules being handed down by the U.S. Supreme Court in the Hobby Lobby decision and other actions.

The standard was written into the state’s Women’s Contraception Equity Act of 1999, which requires any prescription plans offered in California to cover prescription contraceptives.

In upholding the law against a constitutional challenge from Catholic Charities in 2004, the state Supreme Court noted that the law’s definition of a “religious employer” entitled to an exemption is specific. The employer must be a nonprofit entity whose purpose is the “inculcation of religious values,” and which “primarily employs”and primarily serves persons who share its religious tenets. Not even Catholic Charities qualifies for an exemption under those rules. Nor would Loyola Marymount or Santa Clara University.

What’s yet unclear is how the two universities will respond to the DMHC letter. At Santa Clara, most insured employees are enrolled in managed care plans subject to DMHC regulation, Diamond says. The universities could get around the state rules by becoming self-insured for health coverage. That would bring their health benefits under the jurisdiction of ERISA, a federal law, which doesn’t impose an abortion mandate.

But self-insurance might be more expensive for the universities--it means they would be shouldering more of the risk of the cost of employee healthcare. The universities therefore find themselves at what may be a dead end. But it’s a dead end of their own making. They looked for a route around state law, and acted secretly, to boot. Now that route has been blocked, as it should be.

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