The Bishops believe that Catholic insurance should not cover contraceptives, because they do not want to encourage what they say is sinful behavior. There are many other situations where the church would be encouraging vice by paying for medical treatment. I would be curious to know where the church would come down on a few of these issues:
1. Sexually-transmitted diseases are a consequence of promiscuous sex. If the church treats such conditions, people do not live with the consequences of sinful behavior. This is clear moral hazard which will encourage more vice. However, if left untreated, STDs can be rapidly fatal, hurt unsuspecting spouses in cases of infidelity, cause birth defects and stillbirth of fetuses, and increase the risk of pregnancy.
2. On one hand, the Gardasil vaccine gives our daughters carte blanche to have lots of promiscuous, unprotected sex. On the other hand, it is a simple vaccine that prevents cancer. Its easy to see where the controversy comes from. Reducing the risk of a behavior will certainly encourage said behavior.
3. What to do in cases of cervical cancer caused by HPV? If we treat our daughters every time they develop cancer after having unprotected sex, aren't we just encouraging their sinful behavior?
4. Gluttony is a grievous sin. However, bariatric surgical procedures have been shown to be cost effective at increasing the health and quality of life in morbidly obese people. Should the church be forced to encourage gluttony?
5. Type II diabetes is, like obesity, very often caused by excess consumption. Should the church be forced to cover the costs of medications that control the disease, hence promoting sinful behavior?
6. Many people who smoke will develop lung cancer. For Catholic insurance to pay for treatment would clearly violate the teachings of the bible; see Corinthians:19-20
"Don’t you realize that your body is the temple of the Holy Spirit, who lives in you and was given to you by God? You do not belong to yourself, for God bought you with a high price. So you must honor God with your body."
7. If a person develops a parasite or neurocysticercosis after eating Biblically-forbidden pork products, obviously the church would violate their principles if they paid for treatment.