Whose religious freedom is most validly conceived as being at risk?
The employer's. If this impinged on the conscience of the employees, then Catholics would be obliged not to work for secular employers providing the objectionable coverage. I have never heard anyone make that claim for the entirely natural reason that it is a crazy claim. Furthermore, the mandate is upon employers, not employees. It seems clear that that is the natural scope of the argument.
What sort of harm might be done to the employer?
Let's enumerate the ways in which the employer certainly will not be harmed (any of these harms would clearly be a severe violation of religious freedom):
- They will not be obligated to purchase contraceptives. (They are obligated to provide employees with compensation usable for the purchase of contraceptives, which is not the same thing.)
- They will not be obligated to provide contraceptives.
- They will not be obligated to use contraceptives. (for completeness sake. It's hard to imagine a Catholic institution with a systematic need to use contraceptives professionally)
Here is a sort of harm that would not be introduced by the mandate, but might conceivably be an existing harm:
- The funds of a Catholic institution might be used by a third party to purchase an objectionable service (true before and after the changes thanks to the broad utility of money and the inability of non-church Catholic institutions to to fire people for sinning)
- The Catholic institution might be forced to enter into a contract for an objectionable service
- The Catholic institution might compensate a sinning employee more than his otherwise identical but non-sinning counterpart. This would be objectionable from both a direct standpoint, and also from the standpoint of systematically encouraging sinful acts.
I don't think either of these harms occur, but I do think it's worth considering the conditions that prevent these harms from occurring.
The first important clarification that needs to be made is the nature of the relationship between the employer, the health insurance, and the employee. The employer provides the employee with a compensation package. This compensation package includes direct monetary compensation, but also includes a variety of other things like access to a company car or other equipment, travel budgets, journal subscriptions, and health insurance. Health insurance is a contract between an insurance company and the insured, in which the insured purchase access to a wide variety of services at the amortized cost of the likelihood of all service use over time over all people insured by the company. The employer serves two important roles in this kind of compensation: as a negotiator, and as a source of funds. The employer is in a much better negotiation position than an individual is, so it can get better prices, and it can make sure that the policy stays up to date by paying the cost of the service directly to the insurer instead of giving it to the employee as money and hoping that the employee remembers to pay the insurer.
The point of all this is that the insurance company doesn't provide the employer with any services at all. The contract is between the insurer and the insured (quite explicitly, you have to sign a form and everything, it's your name on the policy &c). This means that potential harm 1, about the Catholic institution being required to enter into a contract for objectionable services, is avoided.
Potential harm 2 is a little trickier in this context, because it rests on some subtle distinctions. The important one is the distinction between an item's value and cost. The cost of the employer providing health insurance is the same for two equivalently risky people (and maybe for all people if the employer is a good enough negotiator). That is the compensation provided by the employer. The value of that compensation is subjective with respect to the employee. A perfectly healthy employee might receive literally zero value from the employer health-insurance compensation, but that employee was none-the-less identically compensated. A diabetic, a habitual drunk, a cancer patient, a recreational boxer or part-time thug might derive greater value from their health insurance compensation than the perfectly healthy employee, but they are likewise identically compensated. If the value of compensation is the moral issue then Catholic employers already systematically over-compensated the habitually violent over the peaceful and healthy. But it seems wrongheaded to claim that that's the case, so I think that we can safely put potential harm 2 aside. The compensation of all employees remains the same, regardless of sinning status, but the value of the compensation varies systematically with respect to the sinfulness of the employee. This is already the case (consider sexually transmitted diseases for instance) and so no new harm is done. The already existing harm of the institution providing more value to more sinful employees seems to me to be of the same kind as the other pre-existing harm, and could only be remedied by the same mechanism (allowing Catholic institutions to fire people for sinning).
Incidentally, as I've mentioned before in comments, I think this whole issue is moot because the purchase of contraceptives is not in and of itself sinful. The only sinful thing about contraceptives is using them to prevent pregnancy, an act for which culpability cannot be transferred. More fundamentally, I don't think that it's possible to sin without doing something sinful. Religious institutions are obligated to avoid doing sinful things, and to condemn sinful actions, and so long as they are allowed to do so no freedom is violated.