The administration has again missed a chance to resolve a serious religious liberty controversy of its own creation.

Well over a year ago the Department of Health and Human Services mandated that all employers provide insurance coverage for contraception, sterilization, and abortion-causing drugs, even if doing so violates their deeply-held religious beliefs. The administration exempted only churches themselves from this requirement, ignoring the longstanding bipartisan consensus favoring broad protection for conscience rights. Not only that, to receive an exemption a church had to have the primary purpose of inculcating religious values, and had to serve and employ primarily members of its own faith. As New York’s Cardinal Timothy Dolan noted, “Jesus and His disciples would not qualify for the exemption.”

Even traditional administration allies balked at this cramped idea of whose religious beliefs were worthy of protection. HHS unsuccessfully tried to make the problem go away by postponing enforcement against some religious objectors for a year. Eventually it suggested an accommodation – insurers themselves could automatically provide the coverage to policyholders for free – that was widely dismissed as an accounting gimmick, and an unworkable one at that.

These ineffective attempts to resolve the issue satisfied very few, and soon a broad array of religious schools, hospitals, social service agencies, and private employers challenged the HHS mandate in court. Currently over 130 plaintiffs in 44 mandate cases are attempting to vindicate their religious liberty rights. Momentum in the cases litigated so far runs decidedly against the administration, and the first appellate court to hear the matter ordered the government to publish a revised rule in the first quarter of 2013.

This legal pressure no doubt led to the administration’s attempt to square the circle last Friday. The latest proposal takes positive steps: it removes the exemption’s unprecedented language requiring that religious groups focus on the "inculcation" of religion, and that they serve and employ only those who share their faith, in order to fall within the exemption. It also sidesteps some potential Establishment Clause concerns. But these welcome changes still don’t resolve fundamental religious liberty questions at stake. Most objecting religious employers are in the same position they were before Friday, faced with a choice between giving up their religious beliefs or facing crippling government fines.

Take that narrow exemption. Its most objectionable language has been removed, but functionally the exemption hasn’t been broadened at all. The administration admits as much, stating that “this proposal would not expand the universe of employer plans that would qualify for the exemption beyond that which was intended in the 2012 final rules.” In other words, colleges, hospitals, and most social service organizations are still not exempt from the mandate.

Or take the accommodation for religious non-profits. Once again the administration ignores many groups’ view that it’s not just about the money: facilitating access to objectionable goods and services violates their religious beliefs as well. Instead of responding to this concern, the administration offers an updated version of its accounting gimmick, requiring the religious groups’ insurance companies to automatically issue separate policies to cover contraception, sterilization, and abortion-causing drugs. It remains unclear where HHS gets the authority to force insurers to issue these policies, and who will ultimately pay. And as before, those who self-insure are left without a concrete, workable solution.

What about for-profit employers? Once again, the latest proposal fails to protect their religious freedom. But when it comes to religious liberty, why should it matter whether an organization is run as a non-profit or a for-profit entity? Private employers have raised strong religious liberty claims that have yet to receive adequate answers.

Common-sense conscience protections are routinely included in legislation that raises religious liberty concerns. Had that path been pursued at the outset, this intractable controversy could have been avoided. Instead, religious employers still struggle to be heard. With this latest round of mandate revisions, the administration has missed another opportunity to take religious liberty seriously.