<i>,"but church institutions would retain the right to employ and serve on the basis of their faith claims."</i>

This point needs clarification. 

 Religious groups operate many social services as contractors for government. They respond to RFPs, which specify the work and all related requirements. Discrimination in employment is forbidden.  The RCC receives billions of $ every year of taxpayer money as a  government contractor.  The RCC has argued that it should be permitted to discriminate based on religious beliefs (funding contraception,  hiring gays etc).  It is absolutely wrong in this. 

 If the church wants to discriminate in employment, health benefits, or in choosing who it will serve (such as gay couples seeking to adopt), then it must self-fund 100%.

Those in the for profit  private sector should not be permitted to discriminate either.  Choosing whom to serve based on sexual preference is just as wrong as choosing not to serve those of a different race or religion.