U.S. Supreme Court justices hinted they might strike downPresident Barack Obama's health-care law as the court's Republicanappointees suggested Congress went too far by requiring Americansto obtain insurance.

On the second of three days of arguments in the historic case,justices' questions indicated they might split 5-to-4, with thecourt's five Republican appointees banding together to topple thelaw.

Justice Anthony Kennedy said the measure is unlike others thecourt upheld previously because it tells individuals they “mustact.” Kennedy, who most often occupies the court's ideologicalmiddle ground, said, “That changes the relationship of thegovernment to the individual in the very fundamental way.”

The law would extend coverage to 32 million people and revamp anindustry that accounts for 18 percent of the U.S. economy. Thecourt hasn't overturned a measure with such sweeping impact sincethe 1930s, when it voided parts of Franklin D. Roosevelt's NewDeal, the package of economic programs enacted in the 1930s inresponse to the Great Depression.

The court probably would rule in late June, months before theNovember election. A ruling against the measure would giveammunition to Obama's Republican challengers, who have said the lawshould be repealed.

The Standard & Poor's Supercomposite Managed Health CareIndex of 12 insurance companies fell 0.6 percent at 1:37 p.m. NewYork time, even as the broader S&P was little changed.

The Obama administration needs the vote of at least one of thefive Republican appointees on the nine-member court to uphold thelaw.

Heading into today's session, Chief Justice John Roberts andJustices Antonin Scalia, Samuel Alito and Kennedy were the mostlikely candidates, given their records. All four aimed questions atU.S. Solicitor General Donald Verrilli, who argued in the law'sdefense.

Roberts said the health plan would “require people who are nevergoing to need pediatric or maternity services to participate inthat market.”

Roberts and Kennedy also questioned the arguments of two lawyerschallenging the statute.

'Huge Subsidy'

Young people are “uniquely, proximately very close to affectingthe rates of insurance and the cost of providing medical care in away that is not true in other industries,” Kennedy told MichaelCarvin, the lawyer for a business trade group. “That's my concernin the case.”

Alito called the insurance requirement and penalties a “hugesubsidy” from young, healthy people who don't want coverage tothose who need a lot of health care.

Verrilli, the Obama administration lawyer, contended thatCongress can require people to buy insurance under itsconstitutional power to regulate the interstate health-caremarket.

People who don't buy health insurance and can't afford to payfor their care are guaranteed emergency-room treatment when theyneed it, Verrilli said. People who have insurance are subsidizingthem, he said.

Scalia indicated he was skeptical.

“The federal government is not supposed to be a government thathas all powers,” Scalia said. “It's supposed to be a government oflimited powers.”

He added, “What is left if the government can do this?”

The fifth Republican-appointed justice, Clarence Thomas, askedno questions, as is his practice. He has previously voted to puttight limits on Congress's power under the commerce clause.

Justice Sonia Sotomayor suggested the federal government canrequire people to buy insurance ahead of time “because you can'tbuy it at the moment you need it.”

The justices questioned Verrilli on whether Congress could forcepeople to buy things such as food or burial insurance.

“Can the government require you to buy a cell phone” becausesomeone may need to call for emergency fire or police help, Robertsasked.

Justice Ruth Bader Ginsburg rejected Alito's concern thathealthy people would have to subsidize the sick.

“That's how insurance works,” she said. Later, she said, “Peoplewho don't participate in this market are making it much moreexpensive for the people who do.”

Republican Challengers

During yesterday's opening session, the justices suggested theywill reject an argument that they can't consider the case until thepenalty is imposed in 2015.

Obama's Republican challengers all oppose the measure and saythey want to undo it. Former Pennsylvania Senator Rick Santorumappeared outside the court yesterday and attacked Mitt Romney, whosigned a similar state law when he was governor of Massachusetts.Romney is the “worst person” to debate the health law with Obama,Santorum said.

The six hours of arguments spread over three days are the mostthe court has heard in a case in 44 years.

Tomorrow, the last day, the justices will consider what shouldhappen to the rest of the law if they invalidate the insurancerequirement. The court also will take up whether the law, byexpanding the Medicaid program, unconstitutionally coerces statesinto spending more on health care for the poor.

The fate of the insurance requirement will turn partly on thecourt's interpretation of the constitutional provision that letsCongress regulate interstate commerce. The justices' opinions inprevious cases only hint at how they may apply it to the insurancerequirement.

The government says that every American is already part of theinterstate market for health care and that the mandate requiresthem to get coverage to pay for treatment they'll eventually need.The challengers say Americans who fail to buy insurance can't beregulated because they aren't engaged in commerce. Congress hasnever before required people to purchase something, they say.

Upholding the mandate, opponents say, would mean Congress couldforce consumers to buy any product for the sake of stimulating theeconomy. Instead of providing cash incentives to buy new cars andboost the auto industry, as the government did in 2009, Congresscould have required everyone above a certain income level to buy anew car, they say.

The Obama administration and its allies say the auto andhealth-care industries aren't the same. Uninsured people consumed$118 billion in health-care services in 2008 and paid only 37percent of those costs, the administration says. Those costs arepassed from care providers to insurers to policyholders, ultimatelyincreasing the average premium for insured families by $1,000 ayear, the government says.

The government also says the individual mandate will keep policypremiums in check by giving insurers millions of new, low-costcustomers. Otherwise, prices would soar because the law alsorequires insurers to accept applicants with pre-existing conditionsand charge them the same rates as other policyholders, thegovernment says.

Of the four federal appeals courts to rule on the health-carelaw, two upheld it, one declared the insurance mandateunconstitutional and the fourth said the Anti-Injunction Act made ajudicial review premature.

Bloomberg News

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