The problem with the responses is, it seems to me, the fact that the critics claiming that the rule is antithetical to religious freedom, is that the institutions affected by it are those which serve the general public and employ many non-believers. A story in Monday's New York Times made the point vividly, telling stories of the impact the denial of coverage can have on students or employees of Catholic institutions:
One recent Georgetown law graduate, who asked not to be identified for reasons of medical privacy, said she had polycystic ovary syndrome, a condition for which her doctor prescribed birth control pills. She is gay and had no other reason to take the pills. Georgetown does not cover birth control for students, so she made sure her doctor noted the diagnosis on her prescription. Even so, coverage was denied several times. She finally gave up and paid out of pocket, more than $100 a month. After a few months she could no longer afford the pills. Within months she developed a large ovarian cyst that had to be removed surgically — along with her ovary.Many Catholic institutions have striven to transcend sectarian identity, and employ and serve non-Catholics--indeed non-Christians. For them to participate in a secular marketplace in a manner largely indistinguishable from secular enterprises, but to insist that it must be free to adhere to its teachings vis-a-vis as a religious body raises a difficult, not a simple question. The religious liberty interest is attenuated by that decision to enter the stream of commerce not as a religious entity but as a general provider to persons of all or no faith. (Indeed, as the Times article points out, New York State law requires these institutions to cover prescribed birth control, an obligation which the institutions end-run by simply not prescribing them).
The Church's interests are not illusory, but there is here an element of forcing its own conscience onto those who are affiliated with it not religiously, but in a secular manner. All in all, the case for the broader exemption is not, to my mind, legally compelling. Similar state law requirements have been routinely upheld against religious freedom claims at the state court level, with the U.S. Supreme Court denying review.