Two California Catholic universities must cover elective abortions in the health care plans they provide employees, according to a decision released Friday by Governor Jerry Brown.

The affected schools are Loyola Marymount University and Santa Clara University.

The decision comes after both schools announced last fall that they were dropping coverage of “elective” abortions as being incompatible with their Catholic identity.

However, they continued to cover abortions in cases where the procedure was deemed necessary to protect the life or health of the mother, and Loyola Marymount had even allowed employees to pay extra for an abortion-on-demand option.

But that wasn’t good enough for the Californian government.

“Abortion is a basic health care service,” said the state’s health department’s director, Michelle Rouillard, in a letter sent to the schools’ insurers. “All health plans must treat maternity services and legal abortion neutrally.”

Both schools had thought they had secured exemptions last year from a new regulation requiring insurance companies to cover all “medically necessary” procedures, which in California includes aborting unborn babies.

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But the letter from Rouillard suggested that this was a mistake, writing that at the time the state “erroneously approved or did not object” to the insurance plans without abortion coverage. But plans that do not include the coverage “discriminate” against women, she said.

A joint statement from the schools in response to the ruling suggested a compliant attitude. “We have asked our insurers what this new decision means in terms of making sure that our current plans comply with the law,” the schools said.

But Bill Donohue, head of the Catholic League for Religious and Civil Rights, is clear about what he thinks they should do.

“The universities should now sue on First Amendment grounds,” he said. “Not only is this decision morally obscene, it violates the religious liberties of Catholic institutions. Perhaps a judge can educate the Brown administration on the need to keep church and state separate.”

Meanwhile, two non-profit legal advocacy organizations, Life Legal Defense Foundation and Alliance Defending Freedom, wrote to the California Department of Managed Health Care, arguing that the exemption’s removal violates federal law, under which the state cannot mandate that a health insurance plan include abortion coverage without forfeiting federal funds.

But there is an alternative to pursuing the issue through the courts. Dr. Michael Mclean, president of Thomas Aquinas College, says his school and numerous other Catholic charities, orders and dioceses are automatically exempt from the state regulation because they self-insure through a third-party administrator, the RETA Trust.

“Back in the 1990s the Catholic bishops set this trust up in anticipation of the need to avoid the state mandate,” Mclean told LifeSiteNews. “The upshot is that we are exempt.”

Self-insurance is a maneuver used by many small and sole-ownership businesses to turn all medical expenses into pre-tax business expenses. The employer such as St. Thomas Aquinas simply pays all its employees’ covered medical expenses out of revenues, thus eliminating the “insurance provider” that is targeted by state legislators.

This exemption is not fool-proof. The Obama Administration tried to force St. Thomas Aquinas College to cover contraceptives last year but was stopped by a permanent injunction.

There is nothing to stop two more colleges from joining RETA.