Sounds like they just do not want Catholics directly financing; great argument for public healthcare - Edit 1
Before modification by Joel at 10/02/2012 02:29:31 AM
That's likely why DHHS eliminated the exemption: in order to move the conversation away from the realm of barely-veiled theocracy.
From the article linked below:
Obama and DHHS want to give people access to birth control (free choice) regardless of income level (equality). The Catholic Church wants to keep anyone from having access to birth control (oppression) because their specific religious beliefs oppose it (theocracy). It's clear who the "villain" here actually is.
From the article linked below:
The rule goes into effect Aug. 1, but if objections are raised, another year's extension is possible.
That was no consolation to Catholic leaders. The White House is "all talk, no action" on moving toward compromise, said Anthony Picarello, general counsel for the U.S. Conference of Catholic Bishops. "There has been a lot of talk in the last couple days about compromise, but it sounds to us like a way to turn down the heat, to placate people without doing anything in particular," Picarello said. "We're not going to do anything until this is fixed."
That means removing the provision from the health care law altogether, he said, not simply changing it for Catholic employers and their insurers. He cited the problem that would create for "good Catholic business people who can't in good conscience cooperate with this."
That was no consolation to Catholic leaders. The White House is "all talk, no action" on moving toward compromise, said Anthony Picarello, general counsel for the U.S. Conference of Catholic Bishops. "There has been a lot of talk in the last couple days about compromise, but it sounds to us like a way to turn down the heat, to placate people without doing anything in particular," Picarello said. "We're not going to do anything until this is fixed."
That means removing the provision from the health care law altogether, he said, not simply changing it for Catholic employers and their insurers. He cited the problem that would create for "good Catholic business people who can't in good conscience cooperate with this."
Obama and DHHS want to give people access to birth control (free choice) regardless of income level (equality). The Catholic Church wants to keep anyone from having access to birth control (oppression) because their specific religious beliefs oppose it (theocracy). It's clear who the "villain" here actually is.
Nowhere in those statements does anyone affiliated with the Catholic Church advocate denying everyone contraception (which actually would be oppression) or any kind of theocracy. They just do not want Catholics forced to directly pay for something they morally oppose, any more than you would want to be forced to pay for their next new church. That is a reasonable position.
The problem is that healthcare, of which contraception is undeniably a part, is a basic right. Even Santorums comments imply warped agreement (they suggest he thinks healthcare a right of businesses and institutions, to extend to employees—or not—as they please.) It is entirely possible Obama erred in recognizing healthcare as a right but leaving it to private institutions to maintain as much or as little as they wish.
Seems to me anything the public possesses only so far as private institutions and individuals grant is not much of a right. That makes it no less vital to their survival. If healthcare is only available to the 80% of US adults with full time employment, only to the extent their employers underwrite it, either it is not a right or America has a serious civil rights crisis. Three guesses which is the case. 
This is why Obamas healthcare "reform" is unworthy of the name, and why so many of us said it was worse than nothing: Because it is. What is covered at what rate is still entirely at the discretion of private employers and private insurers. All that has changed is that 1) all Americans must purchase private insurance, whether or not they can afford it, or pay a tax penalty, 2) the bloated private insurers driving up costs for both patients and doctors are guaranteed a $900 billion taxpayer windfall and 3) insurers cannot refuse coverage to 50 year old diabetics with heart disease (they are, of course, free to charge them $2000/month knowing most of them will simply pay a $750/year tax penalty instead.) This is why we needed a public option, and still do; we can expect plenty more arguments over whether the feds are unreasonable to expect sick people get medical care.
I will get back to you tomorrow in that other thread, incidentally; now I must sleep (sorry.)