There will on some level always be a crux when private rights and government welfare clash. On most occasions I prefer the freedom from government intrusion, but there is simply no denying that it has its place and its benefit when appropriate.
The way I see it, and this is just my personal moral theory, is that people should be free to do what they want, for religious or nonreligious reasons, as long as they don't put anyone else at risk with their actions.
If they want to refuse blood transfusions themselves, then I'm all for it, but if they're going to deny it to another human being, then they are to be held responsible, and the government should do all it can to try and save that other person from harm.