America's Big Religious War ended Friday. Or at least it ought to.

A little more than a year ago, the Obama administration set off a bitter and unnecessary clash with the Roman Catholic Church over rules mandating broad contraception coverage under the Affordable Care Act. The Department of Health and Human Services' announcement of new regulations is a clear statement that President Barack Obama never wanted this fight.

The decision ought to be taken by the nation's Catholic bishops as a victory, because it is. Many in their ranks, including some of the country's most prominent prelates, are inclined to do just that – even if the most conservative bishops seem to want to keep the battle raging.

But more importantly, the final HHS rules are the product of a genuine and heartfelt struggle over the meaning of religious liberty in a pluralistic society. The contraception dispute was difficult because legitimate claims and interests were in conflict.

The majority of Americans believe that health insurance should cover contraception. At the same time, the Catholic Church has a theological objection to contraception, even if most Catholics disagree with its position. The church insisted that its vast array of charitable, educational and medical institutions should be exempt from the contraception requirement.

The church made a mistake in arguing its case on the grounds of "religious liberty." By inflating their legitimate desire for accommodation into a liberty claim, the bishops implied that the freedom not to pay for birth control rose to the same level, as say, the freedoms to worship or to preach the faith. This led to wild rhetorical excesses, including a comparison of Obama to Hitler and Stalin by one bishop, and an analogy between the president's approach and the Soviet constitution by another.

But the church had good reason to object to the narrowness of the HHS' original definition of what constituted a religious organization entitled to exemptions from the contraception requirement. If a religious organization did not have "the inculcation of religious values" as its purpose and did not primarily employ or serve those who shared the faith, it got no exclusion at all.

The problem is that the vast charitable work done by religious organizations to help millions, regardless of their faith, is manifestly inspired by religion. The church could not abide the implicit reduction of its role merely to private expressions of faith. Don't most Americans devoutly wish that religious people will be moved by their beliefs to works of charity and justice?

The HHS rules announced Friday scrapped this offensive definition in favor of long-established language in the IRS code. In an interview, HHS Secretary Kathleen Sebelius showed a becoming humility, and it would be nice if this encouraged the same among her critics. However defensible the original rules might have been, she said, "they really caused more anxiety and conflict than was appropriate."

"What we've learned," she said, "is that there are issues to balance in this area. There were issues of religious freedom on two sides of the ledger" – the freedom of the religious institutions and the freedom of their employees who might not share their objections to contraception.

This is where the other accommodation kicked in: Many Catholic institutions self-insure. While the administration wants hospital workers and others to have full access to contraception, it seeks to keep religious organizations from having "to contract, arrange, pay or refer for any contraception coverage to which they object on religious grounds."

Under the new rules, employees who want it will be able to get stand-alone coverage from a third party. Some of the costs will be covered by small offsets in the fees insurers will have to pay to participate in the new exchanges where their policies will be on sale. It's an elegant fix.

There are two reasons for hope, particularly for Catholic progressives. First, the administration recognized the problem it had created and resolved it. Vice President Joe Biden, among others, kept lines of communication with the church open.

Second, many bishops have come to realize that the appearance of a state of war with Obama not only troubled many of the faithful – Obama, after all, narrowly carried the Catholic vote – but also threatened to cast a church with strong commitments to immigrants, social justice and nonviolence as a partisan, even right-wing organization.

This war has been bad for everyone involved. Obama has moved to end it. Here's a prayer the bishops will also be instruments of peace.

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