(CNN) -- The Supreme Court ruled Monday that closely held companies cannot be required to pay to cover some types of contraceptives for their employees, ending its term with a narrow legal and political setback for a controversial part of President Barack Obama's healthcare reform law.
The owners of Hobby Lobby, furniture maker Conestoga Wood Specialties and Christian bookseller Mardel argued that the Affordable Care Act violates the First Amendment and other federal laws protecting religious freedom because it requires them to provide coverage for contraceptives like the "morning-after pill," which the companies consider tantamount to abortion.
The decision, which comes two years after the justices narrowly preserved the Affordable Care Act and its key funding provision, could serve as a primer for other pending challenges to the health law.
The issue before the justices was whether Obamacare can mandate contraception coverage specifically for certain businesses that object for religious reasons.
"This case isn't that practically important, except for the employees and businesses involved. There just aren't a huge number of those," said Thomas Goldstein, publisher of SCOTUSblog.com and a Washington appellate attorney.
"But everyone can agree the social questions presented -- about when people can follow their religious convictions, and when people are entitled to contraception care -- are truly important," he said.
The section of law in dispute requires for-profit employers of a certain size to offer insurance benefits for birth control and other reproductive health services without a co-pay.
A number of companies equate some of the covered drugs, such as the so-called "morning-after" pill, as causing abortion.
The specific question presented was whether these companies can refuse, on the sincere claim it would violate their owners' long-established moral beliefs.
The First Amendment says that "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof."
"How does a corporation exercise religion?" asked Justice Sonia Sotomayor at March's oral arguments, summarizing perhaps the key constitutional question at hand.
"This is a religious question and it's a moral question," added Justice Samuel Alito, suggesting the businesses have such a right. "You want us to provide a definitive secular answer."
Conestoga, Hobby Lobby
The justices have a good deal of discretion to frame the competing issues and could reach a limited "compromise" through narrow statutory interpretation.
They could conclude individual owners can make the religious freedom claim, bypassing the corporate rights argument, but still give female workers the flexibility to get covered drugs.
The court weighed two related appeals from Conestoga Wood Specialties, a Pennsylvania cabinet maker, and Hobby Lobby, an Oklahoma-based retail giant that will have more than 700 arts-and-crafts stores nationwide by year's end.
Both corporations emphasized their desire to operate in harmony with biblical principles while competing in a secular marketplace. That includes their leaders' publicly stated opposition to abortion.
The case presented a complex mix of legal, regulatory, and constitutional concerns over such thorny issues as faith, abortion, corporate power, executive agency discretion, and congressional intent.
Health law impact
The political stakes are large, especially for the future effectiveness of the health law, which marks its fourth anniversary this year.
The botched rollout last fall of HealthCare.gov, the federal Obamacare website, has become another political flashpoint along with other issues that many Republicans say proves the law is unworkable.
They have made Obamacare a key campaign issue in their fight to overtake the Senate, and retain control of the House.
Supporters of the law fear a high court setback on the contraception mandate will lead to other healthcare challenges on religion grounds, such as do-not-resuscitate orders and vaccine coverage. More broadly, many worry giving corporations religious freedom rights could affect laws on employment, safety, and civil rights.
The abortion link
The Hahn family, owners of Conestoga, and the Green family, owners of Hobby Lobby, said some of the mandated contraception prevent human embryos from being implanted in a woman's womb, which the plaintiffs equate with abortion.
That includes Plan B contraception, which some have called the "morning after" pill, and intrauterine devices or IUDs used by an estimated 2 million American women.
A key issue for the bench was interpreting a 1993 federal law requiring the government to seek the "least burdensome" and narrowly tailored means for any law that interferes with religious convictions.
Monday's decision comes two years after the justices allowed the law's "individual mandate" to go into effect.
That provision requires most Americans to get health insurance or pay a financial penalty. It is seen as the key funding mechanism to ensure near-universal health coverage.
Under the Affordable Care Act, financial penalties of up to $100 per day, per employee can be levied on firms that refuse to provide comprehensive health coverage. Hobby Lobby, which has about 13,000 workers, estimates the penalty could cost it $475 million a year.
The church-state issue now in the spotlight involves rules negotiated between the Obama administration and various outside groups. Under the changes, churches and houses of worship are completely exempt from the contraception mandate.
Other nonprofit, religiously affiliated groups, such as church-run hospitals, parochial schools and charities must either offer coverage or have a third-party insurer provide separate benefits without the employer's direct involvement. Lawsuits in those cases are pending in several federal appeals courts.
Monday's decision could signal how the court will approach other lawsuits against the health care law.
"We're now getting the second generation of challenges to Obamacare-- about the actual adoption of the statute, and its core provisions," said Goldstein. "We're probably going to see cases over the next five to ten years, as more and more details about the law get put into effect."