UPDATE: This article now includes the statement from the USCCB on the HHS decision.
To say that news of the decision by President Obama not to expand the conscience exemption  for church-affiliated institutions who do not wish to cover birth control is a disaster would be a gross understatement. I'll explain my thoughts on the subject in a subsequent post.
More NCR coverage:
The news story: HHS delays, but does not change, rule on contraceptive coverage 
Analysis: White House refuses to expand conscience exemption 
What can those words “fully committed” possibly mean? They have punched Sr. Carol Keehan and Fr. Jenkins and many other Catholics who have taken shots for this Administration in the nose. They have jumped over the First Amendment to coerce religious organizations to do something we find morally objectionable. They have given people who loved the Affordable Care Act reason for pause, great pause. They have given the Republicans a huge battering ram with which to beat swing voting Catholics over the head.
I say “they,” but the full responsibility for this decision rests with the President. NCR has learned that the President called Cardinal-designate Timothy Dolan, president of the U.S. bishops' conference, this morning to tell him the news. Wouldn’t you have liked to be on an extension to listen in on that conversation. The president looked Dolan in the eye in November and said he would be pleased with his decision. I am guessing that Dolan is not pleased. He is not alone.
Here is the text of Sebelius’ statement:
In August 2011, the Department of Health and Human Services issued an interim final rule that will require most health insurance plans to cover preventive services for women including recommended contraceptive services without charging a co-pay, co-insurance or a deductible. The rule allows certain non-profit religious employers that offer insurance to their employees the choice of whether or not to cover contraceptive services. Today the department is announcing that the final rule on preventive health services will ensure that women with health insurance coverage will have access to the full range of the Institute of Medicine’s recommended preventive services, including all FDA -approved forms of contraception. Women will not have to forego these services because of expensive co-pays or deductibles, or because an insurance plan doesn’t include contraceptive services. This rule is consistent with the laws in a majority of states which already require contraception coverage in health plans, and includes the exemption in the interim final rule allowing certain religious organizations not to provide contraception coverage. Beginning August 1, 2012, most new and renewed health plans will be required to cover these services without cost sharing for women across the country.
After evaluating comments, we have decided to add an additional element to the final rule. Nonprofit employers who, based on religious beliefs, do not currently provide contraceptive coverage in their insurance plan, will be provided an additional year, until August 1, 2013, to comply with the new law. Employers wishing to take advantage of the additional year must certify that they qualify for the delayed implementation. This additional year will allow these organizations more time and flexibility to adapt to this new rule. We intend to require employers that do not offer coverage of contraceptive services to provide notice to employees, which will also state that contraceptive services are available at sites such as community health centers, public clinics, and hospitals with income-based support. We will continue to work closely with religious groups during this transitional period to discuss their concerns.
Scientists have abundant evidence that birth control has significant health benefits for women and their families, it is documented to significantly reduce health costs, and is the most commonly taken drug in America by young and middle-aged women. This rule will provide women with greater access to contraception by requiring coverage and by prohibiting cost sharing.
This decision was made after very careful consideration, including the important concerns some have raised about religious liberty. I believe this proposal strikes the appropriate balance between respecting religious freedom and increasing access to important preventive services. The administration remains fully committed to its partnerships with faith-based organizations, which promote healthy communities and serve the common good. And this final rule will have no impact on the protections that existing conscience laws and regulations give to health care providers.
The USCCB has issued a blisteringly appropriate response to the ruling, including a quote from Sr. Carol Keehan of the Catholic Health Association. The text follows:
U.S. BISHOPS VOW TO FIGHT HHS EDICT
Unconscionable to force citizens to buy contraceptives against their will
No change in limited exemption, only delay in enforcement
Matter of freedom of conscience, freedom of religion
WASHINGTON—The Catholic bishops of the United States called “literally unconscionable” a decision by the Obama Administration to continue to demand that sterilization, abortifacients and contraception be included in virtually all health plans. Today's announcement means that this mandate and its very narrow exemption will not change at all; instead there will only be a delay in enforcement against some employers.
“In effect, the president is saying we have a year to figure out how to violate our consciences,” said Cardinal-designate Timothy M. Dolan, archbishop of New York and president of the U.S. Conference of Catholic Bishops.
The cardinal-designate continued, “To force American citizens to choose between violating their consciences and forgoing their healthcare is literally unconscionable. It is as much an attack on access to health care as on religious freedom. Historically this represents a challenge and a compromise of our religious liberty."
The HHS rule requires that sterilization and contraception – including controversial abortifacients – be included among “preventive services” coverage in almost every healthcare plan available to Americans. “The government should not force Americans to act as if pregnancy is a disease to be prevented at all costs,” added Cardinal-designate Dolan.
At issue, the U.S. bishops and other religious leaders insist, is the survival of a cornerstone constitutionally protected freedom that ensures respect for the conscience of Catholics and all other Americans.
“This is nothing less than a direct attack on religion and First Amendment rights,” said Franciscan Sister Jane Marie Klein, chairperson of the board at Franciscan Alliance, Inc., a system of 13 Catholic hospitals. “I have hundreds of employees who will be upset and confused by this edict. I cannot understand it at all.”
Daughter of Charity Sister Carol Keehan, president and chief executive officer of the Catholic Health Association of the United States, voiced disappointment with the decision. Catholic hospitals serve one out of six people who seek hospital care annually.
“This was a missed opportunity to be clear on appropriate conscience protection,” Sister Keehan said.
Cardinal-designate Dolan urged that the HHS mandate be overturned.
“The Obama administration has now drawn an unprecedented line in the sand,” he said. “The Catholic bishops are committed to working with our fellow Americans to reform the law and change this unjust regulation. We will continue to study all the implications of this troubling decision.”