U.S. Supreme Court justices indicated they may throw out otherparts of President Barack Obama's health-care law if they strikedown its core requirement that Americans obtain insurance.

A day after the justices cast doubt on the insurance mandate'ssurvival, they tangled today over the consequences such a rulingwould have. The court is in its third and final day of arguments onObama's signature domestic achievement, a law that would extendhealth coverage to 32 million people.

Justices across the ideological spectrum expressed interest inoverturning at least provisions that require insurers to coverpeople with pre-existing conditions. The administration and theinsurance industry say those rules are so closely linked to themandate that they can't be separated.

The justices were divided on whether to go further and throw outeverything that remains of the health-care law if they void themandate. The court's four Democratic appointees urged a limitedruling and the Republican appointees offered various levels ofsupport for toppling all remaining provisions.

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

The health law would revamp, in part through the coveragemandate, an industry that accounts for 18 percent of the U.S.economy. The court hasn't overturned legislation with such sweepingimpact since the 1930s.

The justices probably will 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 A ruling against the measure would giveammunition to Obama's Republican challengers, who have said the lawshould be repealed.

This afternoon, justices are hearing arguments on the law'sexpansion of the Medicaid program for the poor. The justices arehearing a total of 6 hours of arguments, the most in 44 years.

The Standard & Poor's Supercomposite Managed Health CareIndex of 12 insurance companies declined 0.63 percent at 1:29 p.m.New York time.

The government and the insurance industry say that if Congresscan't make everybody have coverage, the justices should toss outsections of the law known as the guaranteed-issue andcommunity-rating provisions. Those sections say insurers must issuepolicies and set rates without regard to pre-existing healthconditions.

'Death Spiral'

Without mandatory insurance, the government says thoseprovisions would create an industry “death spiral,” in which onlypatients with costly health conditions would obtain insurance. Thatwould lead to higher premiums, which would prompt healthypolicyholders to drop coverage, causing more rate increases, thegovernment says.

Insurance industry groups, in a court brief, said Congressstructured new policy requirements in a “package deal” withmandatory coverage.

Justice Elena Kagan, an Obama appointee, today pointed tocongressional findings supporting that argument. She also saidthere is a “sharp dividing line” between those insurance provisionsand other parts of the law, including the insurance exchanges thatwould be created so people without employer- provided coveragecould buy policies.

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

The 90-minute session featured a clash among several justices asto how the court could be most deferential to Congress. Early on,Justice Sonia Sotomayor said that perhaps the court should excisethe mandate, if it's found unconstitutional, and let Congress sortout 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 “moreextreme” exercise of judicial power to strike down some of thestatute rather than all of it. Striking only the mandate would“impose a risk on insurance companies that Congress had neverintended,” he said.

Chief Justice John Roberts and Justices Ruth Bader Ginsburg andStephen Breyer all said the law includes items, such asreauthorizing black-lung benefits and an Indian health-caremeasure, that aren't related to the insurance mandate.

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

Added Significance

The debate on the rest of the health-care law took on addedsignificance after questions from justices yesterday indicated amajority might rule against the insurance requirement.

Paul Clement, the lawyer for 26 states challenging thehealth-care law, argued today that the court should invalidate theentire statute if it decides the mandatory insurance section, whichhe called “the very heart of this act,” is unconstitutional.

The mandate and the insurance coverage rules are connected toinsurance exchanges that would be created so people withoutemployer-provided insurance could buy coverage, he said. Those, inturn, are related to tax credits for employers that offer insuranceto their workers, he said.

Keeping parts of the law without the individual mandate wouldleave a “hollow shell,” Clement said. “Whatever you do, Congress isgoing to have options.”

If the court rules the individual mandate unconstitutional, itwould be faced with “a choice between a wrecking operation, whichis what you are requesting, or a salvage job,” Ginsburg toldClement. She said that she would prefer salvaging other parts ofthe measure.

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

In an afternoon session today, the justices will consider achallenge by 26 states that object to a section of the law thatexpands the federal-state Medicaid health-insurance program for thepoor.

Questions from the bench during yesterday's hearing on mandatoryinsurance coverage indicated the justices may split 5- to-4, withthe court's five Republican appointees joining to overturn thatpart of the law.

Republican Support

The Obama administration needs support from at least oneRepublican appointee on the nine-member court to uphold the 2010law. Four of them — Roberts, Scalia, Samuel Alito and Kennedy —interrupted U.S. Solicitor General Donald Verrilli repeatedlyyesterday as he made his case for upholding the law.

An Atlanta-based federal appeals court found thehealth-insurance mandate unconstitutional and ruled that the restof the law remains valid. None of the parties to the case wants theSupreme Court to follow suit.

Because none of the participants supports the appeals court'sconclusion, the Supreme Court appointed an outside lawyer, H.Bartow Farr III, to argue that the rest of the statute — includingthe guaranteed-issue and community-rating sections — should be leftin force even if the justices strike down the individualmandate.

In the afternoon argument, the Medicaid issue may be an uphillfight for the states. No lower court judge has accepted theircontention that the law unconstitutionally coerces the states intospending their own tax dollars against their will.

The health law's Medicaid expansion is designed to cover 17million uninsured people by extending eligibility to those withincomes up to 138 percent of the federal poverty line. States thatdon't comply with the new expansion would lose all or part of theirshare of federal Medicaid funding.

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