Administration Weakens Health Insurance Mandate

February 17, 2017

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One of the less popular features of the Patient Protection and Affordable Care Act (“Obamacare”) is the mandate requiring most people to obtain health insurance. Opposition comes especially from people who are too healthy to feel they need much insurance and too well-off financially to qualify for free or subsidized insurance.

However, the mandate is an integral–and many would say indispensable–part of a health insurance system that relies on private insurers. (Many progressives would prefer a single-payer, “Medicare for all” type of system, but health providers and insurance companies did a pretty good job of taking that off the table.) Without a mandate to buy insurance, insurers may not enroll enough people to generate the premiums they need to cover the people with pre-existing conditions, who are now entitled to insurance. In general, that’s how insurance works, of course. If everybody carries auto insurance or homeowners’ insurance, insurers can raise enough money to cover the people who actually have car accidents or damage to their homes. Insurers cannot make a profit if people can wait to buy insurance until they need a payout. A new system that only insures the sick is no more desirable than an old one that primarily insured the healthy.

During the transition to Obamacare, the tax penalties that apply to the uninsured have been gradually phasing in. The hope has been that as the penalties rise and more people sign up, any premium increases should turn out to be modest and temporary. After all, insurers don’t want to scare away too many of their future customers with high initial premiums. But recently, we have been hearing a lot of complaints both from customers who say their premiums are too high, and from insurers who say their revenues are too low because they don’t have enough customers. Some insurers have been dropping out, leaving consumers with fewer choices.

No one can be sure how much these problems would be alleviated as enrollment increases, or how many adjustments to the law might be needed to make it work better.

Executive action

The Trump administration is not waiting to find out. On his first day in office, the President issued an executive order announcing his intention to repeal the law, as he promised during his campaign. What would happen in the short term is not entirely clear. On the one hand, the order says, “In the meantime, pending such repeal, it is imperative for the executive branch to ensure that the law is being efficiently implemented….” On the other hand, it also said, “To the maximum extent permitted by law, the Secretary of Health and Human Services…and the heads of all other executive departments and agencies…shall exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the Act that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications.”  In other words, we’ll enforce the law, but only if it doesn’t cost anyone anything.

This week, the IRS revealed that it will not require taxpayers to report on their tax returns whether they are insured or not. They can leave that section blank, and the IRS will accept their return and impose no penalty for being uninsured. Unless their insurance status comes out in a tax audit, they are in effect released from the Obamacare mandate. This is not entirely new, since during the transition to Obamacare the IRS has been quietly accepting returns from people who failed to provide the requested information. Strict enforcement was supposed to be in effect for returns filed this year. Under the Trump administration, it won’t be in effect at all. Makers of tax preparation software such as TurboTax are now revising their programs to stop flagging users who fail to answer the health insurance questions.

Maybe this will be another executive order to be tested in court. President Obama was accused of exceeding his authority when he set immigration enforcement priorities, in effect exempting from deportation undocumented immigrants who had been brought to the US as children. Now President Trump is acting to undermine an entire law that he dislikes.

Repeal and replace, or quietly kill?

In an ideal world, the country wouldn’t abandon its existing health insurance system until it had a viable replacement. The more one understands about how the various provisions of the Affordable Care Act work together, the more one realizes how challenging it will be to devise something that works better. President Trump has promised that his improved system will cover more people at lower cost, a very tall order.

While we are waiting for Republicans to come up with such a system, the administration is hedging its bets by trying to make the present system unworkable. Then the country may have no choice but to accept the Republican alternative, whether it is really an improvement or not.

Abortion Gag Rule Likely to Increase Abortions

January 25, 2017

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President Trump has issued an executive order that prohibits foreign aid to any health organization that provides abortion, discusses abortion, or advocates for women’s right to abortion. This action is actually a reinstatement of a rule first introduced by President Reagan in 1984. Since then, Democratic presidents have cancelled it, and Republican presidents have revived it. Critics refer to it as the “gag rule.”

On the surface, the logic of the rule seems simple. If you are against abortions, then you should also be against financing organizations that have anything to do with them. The truth is much more complicated and suggests that the rule will have effects opposite to what is intended. Consider these facts:

  • Many major organizations promoting women’s health, such as International Planned Parenthood, will lose funding because they provide some abortion counseling
  • Activities related to abortion are often a very small part of what such organizations do, and those activities must already be supported by other sources of funding, by US law
  • Most health organizations working in poorer countries devote far more of their resources to fighting diseases and improving women’s access to contraception
  • Access to contraception reduces the unwanted pregnancies that are the main reason for abortions!

When the gag rule has been in effect in the past, organizations that have lost funding have closed women’s health clinics and reduced the number of women receiving contraceptive assistance. According to the NY Times, “A study of 20 sub-Saharan African countries by Stanford University researchers found that in countries that relied heavily on funding from the United States for reproductive health services, abortion rates rose when the Reagan-era policy was in effect.”

The ill effects don’t end there. By promoting safe sex, the same organizations play a major role in reducing the spread of AIDS. Cutting off foreign aid will impede those efforts as well.

The most charitable thing I can say about this policy is that it is a well-intentioned but overzealous and poorly thought-out attempt at reducing abortions. However, I’m not so sure it is even well-intentioned. This policy has been debated and researched long enough for its ineffectiveness to be known. If Republicans persist in pursuing it, that suggests that the real motive is simply to score points with religious conservatives here at home, without regard for the consequences for real women around the world. Now we also have a president who not only changed his position on abortion to help gain the Republican nomination, but is obsessed with “America first” and has far less interest in global human rights or global well-being than his predecessor or his Democratic opponent. I doubt if he will lose any sleep over cutting off assistance to international health initiatives.

Trump’s Health Care Non-Policy

November 4, 2016

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This post was going to be solely focused on Donald Trump’s proposal to “repeal and replace” the Affordable Care Act. Then I heard him assure his supporters yesterday that Hillary Clinton will be indicted for her alleged crimes as Secretary of State. That reminded me that trying to discuss policy issues in this election year is largely an exercise in futility. Trump is not running on policy proposals, but mostly on anger. He is running the most negative presidential campaign in recent memory, mobilizing the anger many Americans feel about the state of the country and channeling it against his opponent. She is to blame for everything that’s wrong with the world, from the loss of manufacturing jobs to the rise of ISIS, including the rigging of this election. Somehow it’s all part of one big criminal conspiracy.

Trump’s personal style, which I described in an earlier post as loud, combative, self-aggrandizing, politically incorrect, and autocratic, makes him the perfect candidate to run such an ugly campaign. His temperament encourages Clinton to base her own case for election largely on his unfitness for office, further turning the campaign into an exchange of insults rather than a discussion of issues.

I will do two things here: first, describe Trump’s health care proposal, but only briefly; and second, comment further on Trump’s mobilization of popular anger.

Repeal and replace Obamacare

Running true to form, Donald Trump seems more interested in blowing up the existing system than replacing it with anything better. His proposals are simplistic, not demonstrating much understanding of the health insurance challenge.

The Affordable Care Act (ACA) was a response to the national embarrassment that millions of Americans were unable to obtain health insurance. Usually that was because they were excluded by some preexisting condition, or because their income was too low to afford the premiums. The ACA was designed to meet a dual goal: on the one hand provide adequate insurance coverage for more people, and on the other hand subsidize premiums in order to make that insurance more affordable. Private insurers had to improve coverage by accepting people with preexisting conditions at no extra charge, observing federal caps on out-of-pocket costs, and providing a standard range of benefits. The law included  a mandate requiring individuals to carry insurance or pay a tax penalty, as well as a mandate on large employers to offer group plans. The mandates are supposed to generate enough premium payments from currently healthy people to cover good benefits for the sick without raising premiums too high. The government helps defray the cost by expanding Medicaid coverage to those slightly above the poverty level (those with incomes between 100% and 133% of the official poverty threshold), and by providing private insurance subsidies for those with incomes up to 400% of the poverty level. The Supreme Court upheld the mandates, but allowed states to opt out of the Medicaid expansion, which many did, even though the federal government would pay almost all of the cost.

Many observers recognized from the beginning that the success of the ACA depended on getting people who are young and healthy but uninsured to sign up. Otherwise, insurers wouldn’t find it profitable to offer health insurance to all without raising premiums too high. This year, premiums for insurance sold on the state exchanges are going up, at least partly for that reason. Many progressives see that as an argument to add a public option for everybody, so that people will not be so dependent on for-profit insurers. (Few countries rely as heavily on private insurers as the United States does.) Conservatives prefer to end Obamacare and rely primarily on the free market to provide coverage.

Donald Trump is in the latter camp. “By following free market principles and working together to create sound public policy that will broaden healthcare access, make healthcare more affordable and improve the quality of the care available to all Americans.” (That’s not a proper sentence, but you get the idea.) We shouldn’t forget, however, that when Obama was elected, the public was clamoring for health care reform precisely because the free market was failing to provide adequate health insurance at an affordable cost for millions of people.

With the Affordable Care Act repealed, Congress would have to go back to square one to figure out how to cover the uninsured at a price they can afford, if legislators were even interested in that goal. Trump’s proposal makes no mention of requiring insurers to cover people with preexisting conditions, or requiring insurers to provide a standard range of benefits. Quite likely, insurers would once again be free to provide little or no coverage to many Americans.

As for making insurance affordable, The ACA’s subsidies would disappear, to be replaced in Trump’s plan by tax deductions for health care premiums. Health care premiums are tax-deductible for businesses now, and they become deductible for individuals too when total medical expenses exceed 7.5% of adjusted gross income. Trump’s plan would make them fully deductible. It would also let individuals put money into tax-sheltered Health Savings Accounts for future medical expenditures. The problem with this is that tax deductions are most valuable to higher-income people who pay the highest rates of income tax. Low-income people wouldn’t get enough back from taxes to offset much of the cost of insurance. The plan helps the people who can already afford insurance more than the ones who can’t.

Obamacare’s expansion of Medicaid, which provides insurance to people with incomes up to 133% of the poverty level, would be replaced by something much vaguer: block grants to the states. Presumably, the federal government would give a sum of money to the states and let them figure out how to finance adequate care for their low-income citizens. Whether states would rise to the occasion and do this very well is anybody’s guess. My guess is that some would and some wouldn’t.

Trump has one more idea for making health insurance more affordable: letting insurers offer health insurance across state lines. Traditionally, insurers have to be licensed in each state where they sell policies. That allows state insurance commissions to set standards, although it can also make policies more expensive in states that set the highest standards. Free-market theory holds that deregulating health insurance would allow more insurers to offer policies in more states, increasing competition and lowering prices. Critics of such deregulation fear a “race to the bottom,” because companies could get their policies approved in states with the weakest consumer protections, but then sell those policies anywhere. Avoiding that would require strong federal standards applying to all states, but free-market conservatives generally oppose those as well. With the widest range of policies to choose from, young healthy people might save money by shopping for the cheapest policy, once again depriving quality insurers of the premium dollars they need to extend coverage to sicker people at a reasonable price.

We already know that for-profit insurers, left to their own devices, can provide health insurance for the wealthy and the healthy. To devise a plan that works for the poor and the sick is the challenge that Donald Trump has hardly begun to tackle. Hillary Clinton and Barack Obama have been working on it for years. Neither of them may have come up with the perfect system, but at least they know what they are doing.

The mobilization of anger

To understand how Donald Trump can generate so much support without being more qualified for the presidency, one needs to understand how much his supporters are driven by anger. One reason is the downward economic mobility of non-college-educated men because of the loss of good manufacturing jobs to automation and globalization. However, downwardly mobile white men are not a large enough group to account for Trump’s popularity, and their preference for the Republican candidate in this race was not at all inevitable. Many of them would have been happy to vote for Bernie Sanders if he had gotten the nomination. While most Republicans have supported free trade, concern for its impact on workers has come more from Democrats like Sanders and Elizabeth Warren. Although Trump boasts about bringing new voters into the G.O.P., he owes his success more to the existing Republican base, most of whom are not downwardly mobile and have other issues than bringing back coal mining jobs.

What Trump has done to be competitive in this race is tap into a much larger source of anger, consisting mainly of conservative resentment that progressive ideas have been gaining traction. From a conservative perspective, the Reagan Revolution should have created a permanent conservative utopia, with free markets, limited government, low taxes, minimal business regulation, and a Christian conservative moral agenda hostile to gay rights and feminism. Public opinion, however, has been shifting on most of these issues, with at least small majorities supporting higher taxes on the wealthy, more financial regulation, campaign finance reform, national health insurance, reproductive choice, same-sex marriage, and a path to citizenship for undocumented immigrants. When conservatives see the country slipping away from their control on many fronts, they get upset.

That helps explain why the Democrats who followed Reagan and Bush into the presidency were unusually vilified. In the 1990s, the Clintons were accused of many forms of wrongdoing, some mildly plausible, others less credible. Bill Clinton was investigated by special prosecutor Kenneth Star, initially for real estate dealings in Arkansas and the death of White House counsel Vince Foster. When Star could not find any crimes there, he turned his attention to Clinton’s sexual relationship with Monica Lewinsky. More recently, Donald Trump led the effort to delegitimize the Obama presidency by questioning his citizenship, and Congressional Republicans investigated Benghazi to death without proving serious wrongdoing by Hillary Clinton. The public never entirely went along with these fishing expeditions. Despite the effort to impeach him, Bill Clinton left office with relatively high approval ratings, as did Hillary Clinton after being Secretary of State. As will Barack Obama.

Under the leadership of Donald Trump, the conservative backlash has become more frenetic. Now we hear talk of endless investigations and possible impeachment before a candidate has even been elected. Trump and his supporters have found Hillary Clinton guilty before she’s even been charged with anything. Their closing argument is that the only way to avoid a constitutional crisis is not to elect her. We have reports of Trump supporters within the FBI trying to use investigations and leaks of investigations to influence the election, whether or not any actual crimes have been committed. I am hardly the first to suggest that these tactics put our democratic institutions at some risk.

Yesterday we had a call for greater civility from, of all people, Melania Trump! (Hopefully civility, like charity, begins at home.) By all means, let’s have more civility, but civility is more than just being nice to one another; it is a matter of allowing the democratic process to work and respecting the results.


Pleading Insanity over Obamacare

March 5, 2015

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Recently a Texas jury found Eddie Ray Routh guilty of murdering Chris Kyle, the US Navy SEAL featured in the movie “American Sniper.” The jury did not accept Routh’s plea of not guilty by reason of insanity.

Apparently, criminal defendants aren’t the only ones pleading insanity these days. Opponents of the Affordable Care Act, who certainly purported to be of sound mind when the Act was debated and passed, have now decided that neither they nor anyone else had a handle on the reality of the legislation. What they and everyone else at the time understood the bill to say was that anyone who signed up for insurance could apply for a federal subsidy, whether they did so through an exchange set up by the state or an exchange set up for the state by the federal government. I followed discussions of the law pretty closely, and I never heard anyone suggest that the millions of Americans who would enroll–and did enroll–through the federal website would be ineligible for subsidies.

Having failed to stop the law from being passed or to get it repealed, opponents have now focused on several places where the legislation refers to the subsidies being obtained through “exchanges established by the state.” That means, they say, that only people who enrolled in the sixteen states where the states created their own exchanges can obtain subsidized insurance.

No one paid much attention to that wording at the time because everyone agreed that the whole point of the law was to make insurance more affordable for people in all states. That’s exactly why the federal government would create an exchange for states that didn’t create their own. Without that, the law makes no sense. It mandates insurance for most Americans, while helping only those in certain states to afford it. It makes insurance companies in every state provide higher levels of coverage (such as coverage for preexisting conditions), but deprives the insurance industry in many states of the expanded customer base that it would need to finance the improvements.

These would have been powerful arguments against the law, if the opponents had only thought to use them. The reason they didn’t is that they understood the law the same way everyone else did at the time, as a rational–although controversial–plan to make health care affordable for all. Now they rest their case on the novel argument that the law was actually crazy, with an unworkable mix of national mandates and state-limited subsidies. But doesn’t that imply that even those who were against it must have been a little crazy for taking it seriously in the first place?

In King v. Burwell, the case argued yesterday before the Supreme Court, the plaintiffs are asking the justices to declare the Affordable Care Act self-contradictory and self-negating. They would focus on the troublesome wording instead of the entire bill, ignoring the longstanding legal principle that the law must be judged by its overall intent. If the justices can radically change what the law is about, perhaps they should also retitle it the “Unaffordable Care Act,” since they will be taking subsidies away from most of the people who qualified for them. (Another good title might be the “We-Should-Have-Read-This Act.”)

What will happen if this rather outlandish argument actually prevails in the Court? Congress could just correct the misleading language, but Republicans will refuse to do so. They will hold out either for repeal or for changes unacceptable to the President, such as removing the mandate that people obtain insurance. (Without the mandate, it probably doesn’t pay for the insurance companies to participate in this market and accept the higher standards of coverage.) Some states might now set up an exchange to keep their citizens eligible for subsidies. But others will no doubt hold out, leaving millions without coverage.

If the Court had found the Affordable Care Act unconstitutional in National Federation of Independent Business et al v. Sebelius, on the grounds that the federal government lacked authority to subsidize private health insurance, then people would have to live with that. But now the Court is being asked to do something very different and more bizarre: decide that a law that was already ruled constitutional doesn’t actually authorize the constitutionally permissible action it was created to accomplish, at least not in most states. It’s funny that the brilliant justices now arguing for that interpretation didn’t notice that when they reviewed the law the first time.

Oh well, if they need a defense, there’s always the insanity plea.

Postscript: On June 25, 2015, sanity prevailed, as the Supreme Court ruled 6-3 that enrollees in all states are eligible for subsidies under the Affordable Care Act.

Religious Exemptions for Corporations?

November 30, 2013

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The Supreme Court has agreed to hear the cases of two corporations–Hobby Lobby and Conestoga Wood Specialties Corp.–that want an exemption on religious grounds from providing their employees contraception coverage under the Affordable Care Act. The owners maintain that having to include such coverage in their corporate health care plans violates their religious rights.

In order to make their case, they will have to convince the Court that for-profit corporations as well as individuals and religious organizations have first-amendment religious rights, and also that this particular exemption from the law is constitutionally required. Lower courts have disagreed over these issues.

Do corporations have religious rights?

Advocates for the religious exemption argue that the corporate form of ownership shouldn’t stand in the way of exercising religious rights. Individuals who have a controlling interest in a corporation should be as free to follow their religion in their corporate policies as in their personal choices.

Although courts have considered corporations “persons” in some respects, they have always maintained some distinction between individual rights and corporate rights. Individuals are natural persons with natural or “God-given” rights that the state must respect. Corporations are legal entities that owe their very existence to a state charter. The state can decide which rights they need in order to carry out their social functions, such as the right to make contracts and take positions on social issues. In Citizens United, the Supreme Court went farther than courts have gone before in defining corporate spending on political campaigns as a speech right required by the Constitution. Nevertheless, some rights are still reserved for natural persons, such as the right to vote. The right to practice a religion is among the most personal of rights, and one would think it would be the last one to be associated with for-profit corporations. Individuals who share ownership of a corporation separate themselves from it by disclaiming any liabilities for its losses beyond the value of their shares. Can they at the same time expect to use the corporation as a vehicle for exercising their personal religion?

If the Court does take the novel position that corporations have religious rights, that will invite a great deal of future litigation to establish just what those rights are.

Is an exemption from contraceptive coverage a legitimate religious exemption?

Even if the Court does agree that corporations as well as individuals can claim exemptions from federal laws on religious grounds, it still will have to deal with the legitimacy of the contraceptive exemption in particular.

Eugene Volokh has provided a good summary of religious exemption law. Before 1993, the Supreme Court had ruled in somewhat conflicting ways on the issue. In Sherbert v. Verner in 1963, the Court recognized a presumptive constitutional right to exemptions on religious grounds, placing the burden on the state to show why the exemption should not be granted.

Obviously, the state had to be able to draw the line somewhere; otherwise a Muslim could claim that only governments based on Islamic law are legitimate, and that Muslims living in the United States can’t be compelled to support the government in any way, such as by paying taxes.

To distinguish cases where religious objectors win from those in which they lose, the Sherbert-era Court used what it called “strict scrutiny” when the law imposed a “substantial burden” on people’s religious beliefs (e.g., when it banned behavior that the objectors saw as religiously compelled, or mandated behavior that the objectors saw as religiously prohibited):  Religious objectors must prevail unless applying the law to them is the least restrictive means of serving a compelling government interest.

In the hypothetical Muslim case, the state could argue that collecting taxes on all incomes is the least restrictive means of serving the compelling interest of funding the government, whether each individual likes that government or not. On the other hand, a law banning head scarves would probably not be acceptable in this country, since the state would have trouble showing a compelling government interest that justified making Muslims violate their beliefs.

In 1990, the majority in Employment Division v. Smith gave legislators much more freedom to grant or refuse religious exemptions at their discretion. Laws were constitutional as long as they applied to citizens without regard to their beliefs and didn’t discriminate against any religion. However, in 1993 Congress passed the Religious Freedom Restoration Act, which essentially wrote the older Sherbert standard into law, at least with regard to federal law. (In 1997, the Supreme Court recognized the right of the states to make their own laws regarding religious exemptions.)

Even under the Sherbert standard, religious exemptions have not been easy to obtain. In the contraception cases, the corporations will first have to show that providing contraceptive coverage to their employees places a substantial burden on the exercise of their religion, since it compels them to engage in religiously prohibited behavior. This might be considered something of a stretch, since the law doesn’t require them either to use contraceptives themselves or provide them directly to others, but only share the cost if employees exercise their own freedom to use them. Perhaps more challenging, they will also have to show that the state has no compelling government interest in making contraception affordable, or that there are less restrictive ways of accomplishing that end. The Center for Reproductive Rights argues that the Court has already recognized the state’s compelling interest in preserving women’s health, and that the negative effects of unintended pregnancy have already established “the essential role of contraception as a preventive health service to prevent those health impacts.”

In some cases, courts have considered the effect that someone’s exercise of religion could have on people of other religions. In Griswold v. Connecticut (1965), the Supreme Court struck down Connecticut’s ban on contraceptives as a violation of a personal right of privacy. One could argue that the state’s compelling interest extends to protecting the individual’s right to contraceptive access, and that a corporate exemption from contraceptive coverage would expand the employer’s freedom at the expense of the employee’s freedom.

If the Court rules that corporations as well as individuals can obtain religious exemptions, then drawing the line between acceptable and unacceptable exemptions will become even more important. One hotly contested area is sure to be antidiscrimination law. Religious organizations already have a “ministerial” exemption; they are free to discriminate in favor of their own believers in filling important positions. They are also free to discriminate against women, as the Catholic Church does by refusing to ordain them. And even if the Employment Non-Discrimination Act (ENDA) is passed, churches will still be allowed to discriminate against gays and lesbians. If the argument for religiously-based corporate exemptions is upheld, some corporate owners will no doubt claim a right to discriminate on a wide variety of religious grounds.

One of the provisions of the Religious Freedom Restoration Act that I find most troubling is that the beliefs on which an exemption is based do not even have to be “longstanding, central to the claimant’s religious beliefs, internally consistent, consistent with any written scripture, or reasonable from the judge’s perspective. They need only be sincere” (Volokh). Senator Jim Inhofe of Oklahoma has said that we don’t need to worry about catastrophic climate change, since God wouldn’t allow it. If personal religious beliefs can be the basis for corporate exemptions, then a corporation could claim exemption from environmental regulations on such grounds. Hobby Lobby maintains that its real moral concern is abortion, since contraceptives sometimes work by preventing implantation of a fertilized egg. But if the effect of their exemption is that fewer health insurance policies cover contraception, the result could easily be more unwanted pregnancies and more abortions. The corporation’s position doesn’t have to be reasonable in order to be upheld.

The state cannot compel individuals to think rationally, but maybe it needs to be less permissive when it comes to corporate and public policy. Those who dislike federal regulation in general–which includes a number of our current Supreme Court justices–may welcome exceptions for anyone with a sincere objection, no matter what it is. But corporate behavior has too many public consequences to be too easily exempted from public laws. If a corporation dislikes a law, let it make an argument for changing it in the public forum, providing facts and reasons that people of all religious perspectives can understand.