Hobby Lobby wins, narrowly.
As you've no doubt seen, in a 5-4 decision the Supreme Court decided in favor of Hobby Lobby, which means that the company--along with other similarly structured businesses--will not have to provide its employees with coverage of contraceptives it objects to. Hobby Lobby, joined in its suit by Consetoga Wood Specialties, argued that the Affordable Care Act's contraception mandate violated the Religious Freedom Restoration Act. According to RFRA, in order for the government to impose a potential religious burden on a person, it must be advancing a "compelling governmental interest" and it must use "the least restrictive means" possible. The Court ruled that while providing contraception coverage to employees is a compelling interest, the mandate fails to pass the "least rectrictive means" test.
Instead, the Court held, the government could pay for contraceptives directly. Or--and this pertains to lawsuits brought by religious employeers--it "could extend the accommodation that HHS has already established for religious nonprofit organizations to non-profit employers with religious objections to the contraceptive mandate." The majority continued: "That accommodation does not impinge on the plaintiffs’ religious beliefs that providing insurance coverage for the contraceptives at issue here violates their religion and it still serves HHS’s stated interests." Perhaps a version of that accommodation will be reworked for businesses like Hobby Lobby.
Justice Ginsburg wrote the main dissent (there were three), and she was joined by Justices Sotomayor, Breyer, and Kagan (in all but one part). Ginsburg criticized the majority for the "startling breadth" of its decision. The ruling means that any business "can opt out of any law (saving only tax laws) they judge incompatible with their sincerely held religious beliefs," she wrote. "The exemption sought by Hobby Lobby and Conestoga would override significant interests of the corporations' employees and covered dependents."
The ruling itself is quite narrow. First, it applies only to businesses defined by by the IRS as "closely held." Such companies have more than half the value of "outstanding stock owned...by five or fewer individuals at any time during the last half of the tax year." Second, the ruling pertains only to the contraception mandate. Employers claiming religious objections to covering, say, blood transfusions, cannot exclude such procedures from their employee health plans. Neither will racial discrimination be permitted: "The government has a compelling interest in providing equal opportunity to participate in the workforce without regard to race, and prohibitions on racial discrimination are precisely tailored to acheive that critical goal." As noted by SCOTUSblog, "this leaves open the question of whether the government has a similarly compelling interest in preventing discrimination on the basis of sex or sexual orientation."
SCOTUSblog also raised two key questions not settled by the ruling: Can the Department of Health and Human Services offer closely held for-profit businesses the "accommodation" it devised for religiously affiliated employers who object to the contraception mandate? That accommodation, you'll recall, allows such organizations to exclude contraception coverage from their employee health plans, while requiring third parties to provide the coverage to employees who want it. All they need to do is self-certify that they object to covering contraception on religious grounds, and they're accommodated.
That leads to the second question: Some religious organizations (like Notre Dame) have objected that the self-certification process itself creates a substantial burden on their religious freedom--and therefore violates RFRA--because it forces them to participate in a process that leads to employees receiving contraception. Will the Supreme Court agree? Those cases haven't yet made it there. But it won't be too long now.
Update: Have a look at Mark Silk's take. The majority's suggestion that the accommodation balances the government's compelling interest with RFRA's "least restrictive" test means that "Hobby Lobby will prove to be a significant setback for the Catholic bishops and other free exercise maximalists, a good omen for contraception coverage advocates, and a fine result for those interested in a reasonable balance of the interests at hand."