Justices weigh law’s fate without mandate

WASHINGTON — Supreme Court justices examined whether most of President Barack Obama’s healthcare law could survive even if its most contentious provision — the requirement that Americans obtain insurance — were struck down.

The court concluded its three days of hearings Wednesday on Obama’s signature domestic achievement, designed to extend health coverage to 32 million people. After casting doubt Tuesday on the insurance mandate’s survival, they tangled on the final day over the consequences such a ruling would have.

“My approach would say, if you take the heart out of the statute, the statute’s gone,” Justice Antonin Scalia said.

The 2010 health-care law revamps an industry that accounts for 18 percent of the U.S. economy. The court hasn’t overturned legislation with such sweeping impact since the 1930s. The justices heard more than six hours of arguments starting Monday.

On Wednesday, the court addressed what should happen to the rest of the law if the insurance mandate is thrown out.

Justices across the ideological spectrum expressed interest in overturning at least the provisions that require insurers to cover people with pre-existing conditions. The Obama administration and the insurance industry say those rules are so closely linked to the mandate that they can’t remain without it.

The justices were divided on whether to go further and throw out everything that remains of the health-care law if they void the mandate. The court’s four Democratic appointees urged a limited ruling and the Republican appointees offered various levels of support for toppling the remaining provisions.

In a separate session Wednesday, the court heard arguments on the law’s expansion of the Medicaid program for the poor. Justices appointed by Democrats defended Congress’ power to expand Medicaid, while those appointed by Republicans expressed support for the argument made by 26 states that they would be unlawfully coerced into participating in the expansion.

The justices probably will rule in late June, months before the November election.

The government and the insurance industry say that if Congress can’t require coverage for everyone, the justices should toss out sections of the law that say insurers must issue policies and set rates without regard to pre-existing health conditions.

Without mandatory insurance, the government says, those provisions would create an industry “death spiral” in which only patients with costly health conditions would obtain insurance. That would lead to higher premiums, which would prompt healthy policyholders to drop coverage, causing more rate increases, the government says.

Insurance industry groups, in a court brief, said Congress structured new policy requirements in a “package deal” with mandatory coverage.

Justice Elena Kagan, an Obama appointee, Wednesday pointed to congressional findings supporting that argument. She said there is a “sharp dividing line” between those insurance provisions and other parts of the law, including the insurance exchanges that would be created so people without employer-provided coverage could buy policies.

Kagan suggested she would oppose overturning the entire law, saying “half a loaf is better than no loaf.”

Several justices disagreed on how the court could be most deferential to Congress. Justice Sonia Sotomayor said that perhaps the court should excise the mandate, if it’s found to be unconstitutional, and let Congress sort out the next step.

“The bottom line is: Why don’t we let Congress fix it?” Sotomayor asked.

Justice Anthony Kennedy questioned whether it would be a “more extreme” exercise of judicial power to strike down some of the statute rather than all of it. Invalidating only the mandate would “impose a risk on insurance companies that Congress had never intended,” he said.

Chief Justice John Roberts and Justices Ruth Bader Ginsburg and Stephen Breyer said the law includes items, such as reauthorizing black-lung benefits and an Indian health-care measure, that aren’t related to the insurance mandate.

“Why make Congress redo those?” Ginsburg said. It would be better to let Congress decide “whether it wants them in or out,” she said.

Paul Clement, the lawyer for the 26 states that are challenging the health law, argued that the court should invalidate the entire statute if it decides the mandatory insurance section, which he called “the very heart of this act,” is unconstitutional.

Roberts and Kennedy also asked hard questions of Deputy Solicitor General Edwin Kneedler. Kneedler said that the only other provisions the court should kill in the event the mandate is stricken are the two that bar refusal of coverage to sick people and limiting the charges to old or sick people.

Scalia suggested many members of Congress might not have voted for the bill without the central provisions, and he said the court should not go through each and every page to sort out what stays and what goes.

“What happened to the Eighth Amendment?” Scalia asked, referring to the Constitution’s ban on cruel and unusual punishment. “You really expect us to go through 2,700 pages?”

The mandate and the insurance coverage rules are connected to insurance exchanges that would be created so people without employer-provided insurance could buy coverage, he said. Those, in turn, are related to tax benefits for employers that offer insurance to their workers, he said.

Invalidating only the individual insurance mandate would be the “worst-case scenario” for insurance companies, said Paul Heldman, a health-policy analyst at Potomac Research Group in Washington. “That would create an unstable market for insurers in which they would be stuck covering the most expensive people while leaving the healthier people off the insurance rolls.”

In an afternoon session Wednesday, the justices considered a challenge by states to the expansion of the federalstate Medicaid health-insurance program for the poor.

The health law’s Medicaid expansion is designed to cover 17 million uninsured people by extending eligibility to those with incomes of as much as 138 percent of the federal poverty line. States that don’t comply with the new expansion would lose all or part of their share of federal Medicaid funding.

“Can you conceive of any state saying no” to additional federal Medicaid funds, Scalia asked U.S. Solicitor General Donald Verrilli, who defended the measure. “And if you can’t, that sounds like coercion.”

Ginsburg said she couldn’t recall a “federal program struck down because it’s so good it becomes coercive to be in it.”

Breyer minimized concerns by the states that the federal government is coercing them. He said the government has for years had the discretion to withhold Medicaid money if states don’t follow the rules, and the health-care law doesn’t change that power.

Verrilli took a few seconds at the end of the Medicaid argument to make a final plea for the court to uphold the entire law, which he said would “secure the blessings of liberty” for millions of Americans by providing them with affordable health care.

Verrilli told the court that Congress had made a policy decision to fight the high cost of medical care through the new law. “I would urge the court to respect that judgment,” he said.

Clement retorted that it would be a strange definition of liberty to make people who may not want healthcare insurance to buy it. And he called Congress’ threat to cut all Medicaid funding from states that refuse to expand the program “a direct threat to our federalism.”

The Obama administration needs support from at least one Republican appointee on the nine-member court to uphold the 2010 law. Four of them — Roberts, Scalia, Samuel Alito and Kennedy — interrupted Verrilli repeatedly Tuesday as he made his case for upholding the law.

An Atlanta-based federal appeals court found the healthinsurance mandate unconstitutional and ruled that the rest of the law remains valid.

The health-care cases are National Federation of Independent Business v. Sebelius, 11-393; Department of Health and Human Services v. Florida, 11-398; and Florida v. Department of Health and Human Services, 11-400.

Information for this article was contributed by Greg Stohr, Laurie Asseo, Bob Drummond and Drew Armstrong of Bloomberg News; by Michael Doyle, David Lightman and Lesley Clark of McClatchy Newspapers and by Mark Sherman, Jesse J. Holland, Pete Yost and Jessica Gresko of The Associated Press.