I tend to agree, it is a health issue. I suppose, if you really wanted to, you could make it an elective course, allowing parents to opt out for their children. It may be a stupid thing for them to do (at least in my opinion) but they could do it.
As for the Church, theoretically more babies means more followers. But how, then do you explain the marked decline in Catholics around the US, at least. And getting new priests (and, I assume, nuns) from this country is a serious problem for them.
It is my belief that better education combined with increased availability of information, through the Internet, cable TV, even cell phones, allows people to learn about other religions, or arguments against religions, and gives them more options. Unfortunately, it seems that many of those who are turning their backs on religion are placing their faith in UFO's, Bigfoots (Bigfeet?) and lake monsters, instead.