The problems with such legislation are numerous: First of all, patients are a captive audience, a vulnerable population. An individual who feels that they need the protection of the law because t because they don't want to engage in some healthcare practice that they find morally repugnant, is saying 'my rights supercede the rights of the patient'. In healthcare, where the healthcare provider is put in a position of power and trust and the relationship is inherently unequal, this is an abuse of power. R. Alto Charo, bioethicist at the University of Wisconsin, gives a good example in the Post article: Doctors opposed to fetal tissue research, for example, could refuse to notify parents that their child was due for a chicken pox inoculation because the vaccine was originally produced using fetal tissue cell cultures, and be immune from state disciplinary action and malpractice suits.
Could you imagine? A doctor refusing to treat an AIDS patient because she/he finds that the patient's lifestyle is 'morally repugnant'. The American Medical Association has addressed this in its Principles of Medical Ethics: “the physician has an ethical obligation to help the patient make choices from among the therapeutic alternatives consistent with good medical practice” (Opinion E-8.08, “Informed Consent”).
From a legal standpoint, this legislation could be challenged on a variety of levels: Aside from affecting an employers unfettered right to hire someone 'at will', this legislation is attempting to create a protected class when there is none – you can’t give more rights to one group by taking away rights from another group (particularly a captive audience or vulnerable population).
On a constitutional level, other challenges include violation of the interstate commerce clause, and denial of individual liberties (a possible 42 USC section 1983 action, based on the state nexus of licensing boards.)
Currently, employers are dealing with the issue on a case-by-case basis -- does the heavy hand of the law have a place in this?
[Updated Feb 16, 2006] Check out what our partner blog, Business Ethics, has to say about this and Walmart.