Elizabeth Sepper and James D. Nelson

States are not supposed to own or operate religious institutions, but they now do. This Article uncovers that across the country, church and state have merged, joint ventured, and contracted to form public, yet religious, hospitals. It traces the origins of these curious institutions to dramatic transformations over the last forty years in the political economy of healthcare and the constitutional doctrine of church and state. At stake are the foundational commitments of secular government to equal citizenship and religious freedom.

Yet, constitutional litigation offers limited recourse. In an increasingly religious marketplace, only sustained attention to the political economy can reverse the confluence of church and state. This Article proposes strategies to unite religion law and political economy and to move from religious domination to pluralism and from discrimination to equality. As government-religious institutions proliferate beyond healthcare—in schools, prisons, police departments, and child-welfare agencies—reform efforts must take on broader trends toward consolidation, privatization, and religionization of the economy.

Introduction

Waking up in a hospital, you spy a religious painting at the foot of the bed. The doctors who rush in wear white coats with the names of a religious figure and of the state. Your treatment options, they tell you, must comply with the faith tradition. Clerics on the ethics committee will approve your care. As you recover, you learn that the government owns the hospital, pays the staff, and puts the state seal on the front of the building. On the board of directors, some seats are reserved for government bureaucrats, others for members in good standing of the Church.

This experience could describe hospital care in many countries around the world. But the United States is not known for such tight-knit relationships between any church and the state. Under the Establishment Clause, governments are not supposed to own or operate religious institutions. They are not expected to impose religious tests for public office or adopt a denomination as their own.

Nevertheless, they have. This Article reveals that across the country, church and state have fused in powerful entities that deliver critical services. The government’s religious hospitals are state-governed, state-run, and/or state-owned. But religion permeates their halls. Faith dictates their charitable missions and ethical decisions. Under the banner of the state, patients may be denied healthcare for religious reasons. Public employees must display religious messages and conform their conduct to religious rules. Positions of governance and leadership, typically open to all in public hospitals, are reserved for individuals who belong to particular sects.

Sometimes the state owns the religious institution outright—like the University of Alabama’s “faith-based health system”¹ 1.See Warren Averett CPAs and Advisors, The Health Care Authority for Baptist Health, An Affiliate of UAB Health System: Consolidated Financial Statements, Required Supplementary Information, and Additional Information 3 (2020), https://www.legisl​ature.state.al.us/pdf/eopa/audit_reports/ExaminersPDFFiles/5956_21-091-CPA-Baptist%20​HCA.pdf [https://perma.cc/R3XE-J372] [hereinafter Baptist Health Financials].Show More with a mission of “witness[ing] to the love of God through Jesus Christ.”² 2.See Spiritual Care, Baptist Health, https://www.baptistfirst.org/patients-and-visitors/spi​ritual-care/ [https://perma.cc/6XEB-3W7U] (last visited Oct. 17, 2022).Show More Sometimes the religious and state entities become joint venturers—like Trinity Health and the University of Michigan, which agreed to run a hospital “consistent with the teachings of the Roman Catholic Church.”³ 3.Amended and Restated Bylaws of St. Joseph Mercy Chelsea, Inc., art. I, § 3, art. II, § 1 [hereinafter Amended and Restated Bylaws] (on file with author).Show More Other times, a dense network of operational, managerial, or other relationships connects church and government—as at the University of Texas, the University of California, and numerous public health districts, where clinical staff and medical students must conform to religious teachings against abortion, contraception, fertility treatments, and LGBTQ-affirming care.⁴ 4.See infra Section I.D.Show More

So how did we end up with institutions that so thoroughly merge public and religious? This Article argues that the answer lies in dramatic transformations in healthcare’s political economy and in Religion Clause doctrine over the last forty years. Neoliberalism made government-religious hospitals economically and politically attractive during a period when the Supreme Court’s erosion of the Establishment Clause made them legally plausible.⁵ 5.Like other contested concepts, there are debates about the term’s core meaning. We focus on two central strands of neoliberal political economy—privatizing social services and valorizing market ordering over democratic governance. See David Singh Grewal & Jedediah Purdy, Introduction: Law and Neoliberalism, 77 Law & Contemp. Probs. 1, 6 (2014) (discussing the definition of neoliberalism).Show More These institutions, joining government authority with religious domination, undermine religious freedom and threaten equal citizenship in a pluralistic society.

From the 1980s onward, policies favoring austerity and privatization became ascendant and decimated the public sector. Public hospitals—a mainstay of cities and a natural home for public universities’ medical faculties—closed their doors or privatized as governments divested.⁶ 6.See George Aumoithe, Dismantling the Safety-Net Hospital: The Construction of “Underutilization” and Scarce Public Hospital Care, 48 J. Urb. Hist. 1, 2–3 (2021); Michelle Ko, Jack Needleman, Kathryn Pitkin Derose, Miriam J. Laugesen & Ninez A. Ponce, Residential Segregation and the Survival of U.S. Urban Public Hospitals, 71 Med. Care Res. & Rev. 243, 244 (2014).Show More Meanwhile, rising costs prompted private hospitals to engage in a relentless drive for revenue.⁷ 7.See, e.g., Andrew T. Simpson, The Medical Metropolis: Health Care and Economic Transformation in Pittsburgh and Houston 121 (2019) (“During the 1980s, 1990s, and 2000s, not-for-profit leaders not only drew organizational inspiration from the for-profit sector by pursuing a wave of mergers and acquisitions . . . , but were also more willing to speak in a language that echoed their corporate counterparts.”).Show More They merged and consolidated at an unprecedented and accelerating rate, nearly eradicating competition in hospital markets.⁸ 8.See Jonathan B. Baker, The Antitrust Analysis of Hospital Mergers and the Transformation of the Hospital Industry, 51 Law & Contemp. Probs. 93, 93 (1988) (“During the early 1980s, acquisitions or consolidations occurred at the rate of roughly two hundred per year, dramatically higher than the yearly rates of fifty in 1972 and five in 1961.”).Show More

But healthcare’s political economy tells only part of the story.⁹ 9.We use the term “political economy” to mean “the relation of politics to the economy, understanding that the economy is always already political in both its origins and its consequences.” Jedediah Britton-Purdy, David Singh Grewal, Amy Kapczynski & K. Sabeel Rahman, Building a Law-and-Political-Economy Framework: Beyond the Twentieth-Century Synthesis, 129 Yale L.J. 1784, 1792 (2020).Show More A contemporaneous revolution in Establishment Clause doctrine abandoned principles of separationism and invited more intensive church-state partnerships.¹⁰ 10.See infra Section III.B.Show More Not long ago, the government-religious hospitals we describe would have encountered rather obvious constitutional obstacles.¹¹ 11.See infra Section III.A.Show More Under the First Amendment’s Establishment Clause, a “wall of separation” was supposed to hold church and state apart.¹² 12.Letter from Thomas Jefferson to the Danbury Baptists (Jan. 1, 1802), in 36 The Papers of Thomas Jefferson 258, 258 (Barbara B. Oberg ed., 2009).Show More States nonetheless could fund religiously affiliated hospitals, provided they delivered secular healthcare services, refrained from discrimination in hiring, and committed to respecting their patients’ consciences.¹³ 13.See infra notes 207–38 and accompanying text.Show More But in the last few decades, courts dismantled a number of constitutional constraints on aid to sectarian institutions. By the early 2000s, Establishment Clause doctrine aligned with neoliberal economic policies to galvanize public partnerships with faith-infused institutions. Privatization took on a religious hue.

Faced with demands for healthcare provision and education, cities, counties, and public universities stepped into this constitutionally unsettled space. And they found few options for partnership. No longer was it common to find the public hospitals that once hosted safety-net services and academic medicine. Trends toward consolidation, which escalated with each passing decade, left nearly all cities with highly concentrated hospital markets.¹⁴ 14.Ninety-five percent of metropolitan statistical areas have highly concentrated hospital markets. Jaime S. King et al., Preventing Anticompetitive Healthcare Consolidation: Lessons from Five States 1, 6–7 (June 2020), https://sourceonhealthcare.org/wp-content/uploads/​2020/06/PreventingAnticompetitiveHealthcareConsolidation.pdf [https://perma.cc/5RRX-87​FJ].Show More The secular options assumed by judges and policymakers had dwindled.

Often, commercially successful religious entities were among the few potential joint venturers and partners. Most commonly, those entities were Catholic. Due to their “hierarchy and interconnectedness,” as well as their longstanding significant market share, Catholic healthcare systems had proved well-positioned to consolidate market power as neoliberalism took off.¹⁵ 15.Allison Roberts, Selling Salvation: Catholic Hospitals in the Healthcare Marketplace, Canopy Forum (2019), https://canopyforum.org/2019/12/19/selling-salvation-catholic-hospi​tals-in-the-healthcare-marketplace-by-allison-roberts/ [https://perma.cc/T99U-54PC]. Today, Catholic systems hold a dominant or high market share in more than one-third of U.S. counties, where 38.7% of women of reproductive age live. Coleman Drake, Marian Jarlenski, Yuehan Zhang & Daniel Polsky, Market Share of US Catholic Hospitals and Associated Geographic Network Access to Reproductive Health Services, 3 JAMA Network Open 1, 6 (2020).Show More And these religious partners, once motivated to claim nondiscrimination, now typically insisted on a more thickly sectarian identity.¹⁶ 16.Melinda Cooper, Family Values: Between Neoliberalism and the New Social Conservatism 271–73 (2017) (detailing this shift in social service providers and government’s role); Stephen Monsma, Putting Faith in Partnerships 270–73 (2009) (describing empirically the spectrum of religious social services from deeply sectarian and faith-infused to more ecumenical); Barbra Mann Wall, American Catholic Hospitals: A Century of Changing Markets and Missions 181–86 (2011) (describing Catholic hierarchy’s increasing extent and rigidity of control over Catholic hospitals and their conflicts with the women religious traditionally sponsoring the hospitals).Show More In this landscape, governments created new institutions where secular and sacred, public and private, share governance, ownership, and operation.

Depending on one’s point of view, the central problem of these hospitals might be privatization of public services, restriction of healthcare access, or discrimination based on sex. While we are concerned about each of these issues, our focus is on the threat to religious freedom as dominance in healthcare has been converted into religious domination backed not only by private power but by the authority of the government.¹⁷ 17.For an extended argument against converting power in one social sphere into domination in another, see Michael Walzer, Spheres of Justice: A Defense of Pluralism and Equality (1983).Show More This confluence undermines equal citizenship and religious freedom in distinct and novel ways.

The promise of secular government is that equal membership in the political community will not depend on one’s religion and that the state will not impose religion on its citizens.¹⁸ 18.See Christopher L. Eisgruber & Lawrence G. Sager, Religious Freedom and the Constitution 52–53 (2007); Alan Schwarz, No Imposition of Religion: The Establishment Clause Value, 77 Yale L.J. 692, 694–95 (1968); James Madison, Memorial and Remonstrance Against Religious Assessments (June 20, 1785), in James Madison: Writings 29, 29–36 (Jack N. Rakove ed., 1999); Thomas Jefferson, A Bill for Establishing Religious Freedom, in 2 The Papers of Thomas Jefferson 545, 546 (Julian P. Boyd ed., 1950).Show More Government’s institutions will be open to all, controlled by the people, and able to give public reasons for decisions.¹⁹ 19.See generally Micah Schwartzman, The Sincerity of Public Reason, 19 J. Pol. Phil. 375 (2011) (discussing the idea of public reason); John Rawls, The Idea of Public Reason Revisited, 64 U. Chi. L. Rev. 765 (1997) (same).Show More America’s religious churches and charities, by contrast, can serve co-religionists, discriminate in their choice of leaders, and give religious reasons that people of other faiths cannot understand.²⁰ 20.See Ira C. Lupu & Robert W. Tuttle, Secular Government, Religious People 73 (2014).Show More

Government-religious hospitals upend this settlement and confound theories on both the left and the right about the relationship between church and state. Across the political spectrum, religion law scholars assume the existence of secular options and the absence of religious domination in the marketplace.²¹ 21.See, e.g., Kent Greenawalt, When Free Exercise and Nonestablishment Conflict 69 (2017) (“If the government is the direct and primary source of funding for a program, religious discrimination by an organization in its employment should probably be regarded as unconstitutional, just as it would be for the government itself.”); Thomas C. Berg, Religious Accommodation and the Welfare State, 38 Harv. J.L. & Gender 104, 150–51 (2015) (“It is sensible to rely in some part on the workings of markets to achieve accommodation’s purpose.”).Show More They broadly agree that equal membership in the political community cannot depend on one’s religion and that the state cannot prefer any denomination. One need not be a strict separationist to draw the line at a state institution that proclaims a denominational identity, imposes religious tests, and uses religious reasons.

The embrace of joint church-state institutions may not be inexorable. Preserving principles of secular government in an increasingly religious marketplace is still possible, if not through constitutional litigation, then by addressing broader trends toward consolidation, privatization, and religionization of the economy. This Article considers a range of concrete reform measures, from embracing competition policy to state provision of social services to transacting for church-state separation. In combination, these reforms would move, albeit incrementally, from religious domination toward pluralism and from religious preference toward equality.

This Article proceeds in four Parts. Examining articles of incorporation, asset purchase agreements, and management contracts, Part I explores the details of government-religious hospitals and presents a rough taxonomy of the forms they take. Parts II and III argue that major shifts in healthcare’s political economy and in Religion Clause doctrine over the last forty years together spurred the merger of church and state. The establishment of government-owned, -directed, and -operated religious hospitals came to threaten equal citizenship and religious freedom. Part IV turns to reforms. It demonstrates how antitrust enforcement, public options, and public utility regulation could reshape the political economy to remedy and forestall government-religious hospitals.

The setting of our law and political economy tale is the hospital sector, but evidence mounts that government-religious institutions may exist elsewhere. The legacy of neoliberalism, with its emphasis on privatization, drove and continues to drive religious-public collaborations—in schools, prisons, police departments, child-welfare agencies, and beyond.²² 22.See infra notes 379–83 and accompanying text.Show More Alliances between religious and economic conservatives have generated transfers of public funds, services, and decision-making to religious institutions. And as in the hospital sector, seemingly unrelated changes in constitutional doctrine increasingly create a path toward merger of church and state.

1. See Warren Averett CPAs and Advisors, The Health Care Authority for Baptist Health, An Affiliate of UAB Health System: Consolidated Financial Statements, Required Supplementary Information, and Additional Information 3 (2020), https://www.legisl​ature.state.al.us/pdf/eopa/audit_reports/ExaminersPDFFiles/5956_21-091-CPA-Baptist%20​HCA.pdf [https://perma.cc/R3XE-J372] [hereinafter Baptist Health Financials]. ↑
2.  See Spiritual Care, Baptist Health, https://www.baptistfirst.org/patients-and-visitors/spi​ritual-care/ [https://perma.cc/6XEB-3W7U] (last visited Oct. 17, 2022). ↑
3. Amended and Restated Bylaws of St. Joseph Mercy Chelsea, Inc., art. I, § 3, art. II, § 1 [hereinafter Amended and Restated Bylaws] (on file with author). ↑
4. See infra Section I.D. ↑
5. Like other contested concepts, there are debates about the term’s core meaning. We focus on two central strands of neoliberal political economy—privatizing social services and valorizing market ordering over democratic governance. See David Singh Grewal & Jedediah Purdy, Introduction: Law and Neoliberalism, 77 Law & Contemp. Probs. 1, 6 (2014) (discussing the definition of neoliberalism). ↑
6.  See George Aumoithe, Dismantling the Safety-Net Hospital: The Construction of “Underutilization” and Scarce Public Hospital Care, 48 J. Urb. Hist. 1, 2–3 (2021); Michelle Ko, Jack Needleman, Kathryn Pitkin Derose, Miriam J. Laugesen & Ninez A. Ponce, Residential Segregation and the Survival of U.S. Urban Public Hospitals, 71 Med. Care Res. & Rev. 243, 244 (2014). ↑
7.  See, e.g., Andrew T. Simpson, The Medical Metropolis: Health Care and Economic Transformation in Pittsburgh and Houston 121 (2019) (“During the 1980s, 1990s, and 2000s, not-for-profit leaders not only drew organizational inspiration from the for-profit sector by pursuing a wave of mergers and acquisitions . . . , but were also more willing to speak in a language that echoed their corporate counterparts.”). ↑
8. See Jonathan B. Baker, The Antitrust Analysis of Hospital Mergers and the Transformation of the Hospital Industry, 51 Law & Contemp. Probs. 93, 93 (1988) (“During the early 1980s, acquisitions or consolidations occurred at the rate of roughly two hundred per year, dramatically higher than the yearly rates of fifty in 1972 and five in 1961.”). ↑
9. We use the term “political economy” to mean “the relation of politics to the economy, understanding that the economy is always already political in both its origins and its consequences.” Jedediah Britton-Purdy, David Singh Grewal, Amy Kapczynski & K. Sabeel Rahman, Building a Law-and-Political-Economy Framework: Beyond the Twentieth-Century Synthesis, 129 Yale L.J. 1784, 1792 (2020). ↑
10. See infra Section III.B. ↑
11. See infra Section III.A. ↑
12. Letter from Thomas Jefferson to the Danbury Baptists (Jan. 1, 1802), in 36 The Papers of Thomas Jefferson 258, 258 (Barbara B. Oberg ed., 2009). ↑
13. See infra notes 207–38 and accompanying text. ↑
14. Ninety-five percent of metropolitan statistical areas have highly concentrated hospital markets. Jaime S. King et al., Preventing Anticompetitive Healthcare Consolidation: Lessons from Five States 1, 6–7 (June 2020), https://sourceonhealthcare.org/wp-content/uploads/​2020/06/PreventingAnticompetitiveHealthcareConsolidation.pdf [https://perma.cc/5RRX-87​FJ]. ↑
15. Allison Roberts, Selling Salvation: Catholic Hospitals in the Healthcare Marketplace, Canopy Forum (2019), https://canopyforum.org/2019/12/19/selling-salvation-catholic-hospi​tals-in-the-healthcare-marketplace-by-allison-roberts/ [https://perma.cc/T99U-54PC]. Today, Catholic systems hold a dominant or high market share in more than one-third of U.S. counties, where 38.7% of women of reproductive age live. Coleman Drake, Marian Jarlenski, Yuehan Zhang & Daniel Polsky, Market Share of US Catholic Hospitals and Associated Geographic Network Access to Reproductive Health Services, 3 JAMA Network Open 1, 6 (2020). ↑
16.  Melinda Cooper, Family Values: Between Neoliberalism and the New Social Conservatism 271–73 (2017) (detailing this shift in social service providers and government’s role); Stephen Monsma, Putting Faith in Partnerships 270–73 (2009) (describing empirically the spectrum of religious social services from deeply sectarian and faith-infused to more ecumenical); Barbra Mann Wall, American Catholic Hospitals: A Century of Changing Markets and Missions 181–86 (2011) (describing Catholic hierarchy’s increasing extent and rigidity of control over Catholic hospitals and their conflicts with the women religious traditionally sponsoring the hospitals). ↑
17. For an extended argument against converting power in one social sphere into domination in another, see Michael Walzer, Spheres of Justice: A Defense of Pluralism and Equality (1983). ↑
18.  See Christopher L. Eisgruber & Lawrence G. Sager, Religious Freedom and the Constitution 52–53 (2007); Alan Schwarz, No Imposition of Religion: The Establishment Clause Value, 77 Yale L.J. 692, 694–95 (1968); James Madison, Memorial and Remonstrance Against Religious Assessments (June 20, 1785), in James Madison: Writings 29, 29–36 (Jack N. Rakove ed., 1999); Thomas Jefferson, A Bill for Establishing Religious Freedom, in 2 The Papers of Thomas Jefferson 545, 546 (Julian P. Boyd ed., 1950). ↑
19. See generally Micah Schwartzman, The Sincerity of Public Reason, 19 J. Pol. Phil. 375 (2011) (discussing the idea of public reason); John Rawls, The Idea of Public Reason Revisited, 64 U. Chi. L. Rev. 765 (1997) (same). ↑
20. See Ira C. Lupu & Robert W. Tuttle, Secular Government, Religious People 73 (2014). ↑
21. See, e.g., Kent Greenawalt, When Free Exercise and Nonestablishment Conflict 69 (2017) (“If the government is the direct and primary source of funding for a program, religious discrimination by an organization in its employment should probably be regarded as unconstitutional, just as it would be for the government itself.”); Thomas C. Berg, Religious Accommodation and the Welfare State, 38 Harv. J.L. & Gender 104, 150–51 (2015) (“It is sensible to rely in some part on the workings of markets to achieve accommodation’s purpose.”). ↑

22. See infra notes 379–83 and accompanying text. ↑