In strictly religious settings, such as the operation of churches, seminaries, etc., I will agree. When it comes to hospitals and universities, it is another competitor in the marketplace.
Furthermore, under Anglo-Saxon law the Church has always had a special status. Hence the first article of Magna carta protected the rights of the Church.
Yes, back in the days when the Church and the State were one, and there was an official religion you had to belong to, in order to have whatever rights of citizenship that a monarchy allowed you at a given time, yes, that's true.
You probably think of religion as a private matter,
You took the words out of my mouth.
...if we follow your logic the churches would be forced on grounds of conscience to abandon charitable activities they have been involved in for almost two thousand years.
They will not have to abandon truly charitable activities, but if they are out there in the marketplace, competing for fees from individuals, money from insurance companies, scholarship funds from public and private sources, and tax dollars, then they should abide by the same rules that everybody in the marketplace has to follow. See my post above about circumstances coming around to hoist them on their own petard.