Barack Obama's hometown Archbishop, Cardinal George, has issued a dire warning: if Obama's regulations on health insurance are allowed to stand, all Catholic hospitals and schools will be destroyed through fines, sold-off to non-Catholics, or closed down within two years.  He says that the Church will be "despoiled of her institutions" be stripped of its "voice in public life," because Obama's regulations of health insurance force Catholics to act against their faith.
The regulations which go into effect next year require religiously affiliated charities, hospitals, and universities to purchase insurance for their employees that includes contraception, sterilization and 'morning after' pills. For Catholics this amounts to "material cooperation" with an objectively sinful act. 

Francis Cardinal George wrote about the choices Obama is forcing on the Church in his column this week:
What will happen if the HHS regulations are not rescinded? A Catholic institution, so far as I can see right now, will have one of four choices: 
1) secularize itself, breaking its connection to the church, her moral and social teachings and the oversight of its ministry by the local bishop. This is a form of theft. It means the church will not be permitted to have an institutional voice in public life. 
2) Pay exorbitant annual fines to avoid paying for insurance policies that cover abortifacient drugs, artificial contraception and sterilization. This is not economically sustainable. 
3) Sell the institution to a non-Catholic group or to a local government. 
4) Close down.
George has been warning of the state's intrusion into religious affairs for a long time. In 2010 he predicted, “I expect to die in bed. My successor will die in prison, and his successor will die a martyr in the public square.”

George wrote in his column that the "The State was making itself into a Church" and said he longed for "the separation of Church and State" that Americans enjoyed recently, "when the government couldn’t tell us which of our ministries are Catholic and which not."
George compared the Obama's vision of "religious liberty" of the United States to that of the Soviet Union in a passage worth quoting at length: 
Liberty of religion is more than freedom of worship. Freedom of worship was guaranteed in the Constitution of the former Soviet Union. You could go to church, if you could find one. The church, however, could do nothing except conduct religious rites in places of worship-no schools, religious publications, health care institutions, organized charity, ministry for justice and the works of mercy that flow naturally from a living faith. All of these were co-opted by the government. We fought a long cold war to defeat that vision of society.

Essentially George is saying that the Obama administration and the progressive intelligentsia are replacing freedom of religion with a more cramped vision of "freedom of worship." You're allowed to believe whatever you want, but you'll do whatever the state tells you to do. 

The ongoing battle over the health-care mandates has brought together not just Catholic bishops but administrators of Protestant universities as well in lawsuits against the  government.