While the media focused intently on Barack Obama’s unilateral move to suspend deportations and issue work permits, they mainly missed another story which may have more long-term impact — depending on what the Supreme Court does this month.  One of Obama’s key allies in the Catholic Church on ObamaCare, the Catholic Health Association, ended a months-long review of the purported compromise Obama and Kathleen Sebelius offered after announcing the HHS mandate on contraception and sterilization on Friday, rejecting it as “unworkable“:

Sharpening an election-year confrontation over religious freedom and government health insurance rules, the nation’s Catholic hospitals on Friday rejected President Barack Obama’s compromise for providing birth control coverage to their women employees.

The Catholic Health Association was a key ally in Obama’s health care overhaul, defying opposition from church bishops to help the president win approval in Congress. But the group said Friday it does not believe church-affiliated employers should have to provide birth control as a free preventive service, as the law now requires.

The hospital group’s decision calls into question a compromise offered by the president himself only months ago, under which the cost of providing birth control would be covered by insurance companies and not religious employers. While churches and other places of worship are exempt from the birth control mandate, nonprofits affiliated with a religion, such as hospitals, are not.

In a letter to the federal Health and Human Services department, the hospital group said the compromise initially seemed to be “a good first step” but that examination of the details proved disappointing. The plan would be “unduly cumbersome” to carry out and “unlikely to adequately meet the religious liberty concerns” of all its members, the group said.

While the US Conference of Catholic Bishops have pushed for universal health coverage in the US for almost a century, the USCCB ended up opposing ObamaCare.  CHA, on the other hand, defiantly backed ObamaCare and helped lobby for it.  The administration had no hesitancy at all in promoting that support as proof that Catholics could back ObamaCare without fear.

Losing CHA over the mandate could be a big problem — if the Supreme Court doesn’t throw out the whole ObamaCare bill.  If only the central individual mandate gets overturned or the whole bill survives, then the legal basis for the HHS mandate remains, and the order will have to get litigated separately.  In a partial overturning, Congress will have to go back and try to either fix what’s left or undo everything else, and having CHA on the other side of political battle will make it even more difficult for Obama to move Congress to fix what remains.  If the whole bill survives, CHA’s opposition will sharpen Catholic opposition to Obama even further — especially with liberal Catholics who have only begun to question the HHS mandate and Obama’s view of power — at a time when Obama needs to stem the tide of a Catholic exodus from his base.

Speaking of which, as The Anchoress and Rocco Palmo note, the letter rejecting the HHS mandate “compromise” was signed by Sister Carol Keehan, whose initial openness to the “compromise” was hailed by the White House:

Coming in a five-page letter sent today by the Catholic Health Association to a top HHS administrator, the move (including draft proposals for an acceptable revision of the controversial Federal rule) follows months of tension between the US hierarchy and the association representing some 2,000 Stateside church health facilities, whose president, Daughter of Charity Sister Carol Keehan, stoked the ire of much of the hierarchy after voicing her approval of the White House’sFebruary “accommodation” on the plan, which the bishops deemed as being insufficient.

Today’s letter was signed by Keehan, CHA’s current board chair [Joseph R. Swedish], and his designated successor.

The Anchoress explains:

Recall that Sister Keehan’s initial approval of the “accommodation”, like Dionne’s, was released via the White House religion press portal almost simultaneously with the WH announcement; it gave enormous political cover to the president, and helped him to divide a church that had — quickly and uncharacteristically — united against the HHS Mandate. Now, she’s walking it back.

The big question will be whether CHA and its subsidiary organizations decide to join in lawsuits already filed against the mandate, or file more of their own.  The group represents over 600 Catholic hospitals, and many more health-care providers, and they could file separately or in the aggregate in new lawsuits in each federal district court.  That will complicate Obama’s public-relations efforts to shrug off the 43 lawsuits already filed — and perhaps convince the media to pay some attention to the wave of demonstrations that will take place in the Fortnight for Freedom, which starts on Thursday, in defense of religious liberty. The media didn’t do its job at all a week ago, when 160 rallies took place across the country against the HHS mandate.