Justices Question Health Law

WASHINGTON—The Supreme Court's conservative justices sharply
challenged the Obama administration's health-care overhaul Tuesday, raising
clearly the prospect that its signature domestic achievement could be struck
down.

The court's liberal and conservative wings seemed inclined
to split evenly over the question of whether the "individual mandate"
requiring Americans to carry health insurance or pay a fee is constitutional.

Justice Anthony Kennedy—nearly always the court's deciding
vote—at times appeared to back the administration's position but also offered
one of the toughest tests to the mandate, suggesting the government faced
"a very heavy burden" on the requirement.

..
Justice Kennedy said the mandate took "a step beyond
what our cases have allowed," echoing in his line of questioning the nub
of the challengers' argument. Later, however, he seemed to show more sympathy
for the government's position.

Justice Antonin Scalia posed the challengers' favorite
hypothetical about the government's power over a market. "Everybody has to
buy food sooner or later, so you define the market as food, therefore,
everybody is in the market," he said. "Therefore, you can make people
buy broccoli."

The solicitor general, Donald Verrilli, seemed ready for the
argument, replying that food isn't a market in which a person's participation
is unpredictable or involuntary.

The skepticism of Justice Scalia and the other conservative
justices brought home the possibility that the insurance mandate could be
overturned. If so, that would raise the question of which parts of the law, if
any, could remain, a question the court was set to address Wednesday morning on
the final day of arguments.

The court's four liberal justices all seemed friendly toward
the law, and two conservative justices—Mr. Scalia and Samuel Alito—left little
doubt they would vote against it. Justice Clarence Thomas remained silent, as
is his custom, but his prior writings suggest little sympathy for the
government's position.

Apart from Justice Kennedy, Chief Justice John Roberts's
vote also appeared to be in question.

Rising to open the two-hour hearing, Mr. Verrilli seemed
almost overcome by the moment, choking momentarily as he opened his defense of
President Barack Obama's signature legislative achievement.

The stock prices of health insurers fell in the morning as
word emerged of Justice Kennedy's skeptical questioning, then recovered
somewhat as a fuller picture emerged.

Health insurers fear that if the mandate is struck down but
the rest of the law survives, they would be forced to accept millions more sick
customers without enough healthy customers to balance out the risk pool.

At the Supreme Court, the courtroom again was packed and
demonstrators outside filled the streets.

Inside, the justices finally arrived at the centerpiece of
the case after two years of legal battles, and they dived headfirst into
questioning what powers the federal government has, and when do they go too
far.

Mr. Verrilli immediately asserted the premise behind the
law: that virtually everyone already needs health care or eventually will. He
said the law doesn't force people to buy something they don't want, but rather
governs how they pay for something they inevitably will need.

The government described an existing nationwide market for
health services and said almost everyone already is part of it. The
challengers, joined by several conservative justices, saw the product in
question as health insurance—and said people have a right to stay out of that
market if they wish.

"Why do you define the market that broadly?"
Justice Scalia asked Mr. Verrilli. "It may well be that everybody needs
health care sooner or later, but not everybody needs a heart transplant."

"That's correct, Justice Scalia, but you never know
whether you're going to be that person," Mr. Verrilli replied, saying that
is why the American health-care system is largely financed through insurance.

The challengers conceded that the government could do many
things to regulate the health-care market, including requiring individuals to
pay for medical services with insurance or creating a system in which the
government pays for everyone's care.

The law aims "to get care for the ones who need it by having
everyone in the pool, but is also trying to preserve a role for the private
sector, for the private insurers," said Justice Ruth Bader Ginsburg.
"There's something very odd about that, that the government can take over
the whole thing and we all say, 'Oh, yes, that's fine,' but if the government
wants to preserve private insurers, it can't do that."

Paul Clement, an attorney representing 26 Republican-led
states challenging the law, said Congress had options beyond a "government
takeover." He said the government could simply use its taxing and spending
power to give insurers a subsidy that would enable them to offer coverage to
all comers.

Alternatively, he said, Congress could require people to
purchase insurance immediately before actually obtaining medical care.

"That would be regulating at the point of
purchase," when individuals would be voluntarily entering the health-care
market, Mr. Clement said.

"It seems as though you are just talking about a matter
of timing—that Congress can regulate the transaction, and the question is when
does it make best sense to regulate that transaction," said Justice Elena
Kagan. "And Congress surely has within its authority to decide…[that] it
makes sense to regulate it earlier."

Justice Kennedy, and to an extent Chief Justice Roberts,
seemed to take that position seriously.

Uninsured people, Justice Kennedy said, "are in the
market in the sense that they are creating a risk that the market must account
for."

Mr. Clement said that was true with any industry. "When
I'm sitting in my house deciding I'm not going to buy a car, I am causing the
labor market in Detroit to go south," he said. But he said that shouldn't
entitle the government to force him to buy a car.

Michael Carvin, an attorney representing private plaintiffs
including the National Federation of Independent Business, rejected the
government's premise that 40 million uninsured Americans are distorting the
health-care market by shifting costs of free emergency-room care to taxpayers
and insurance ratepayers.

"The failure to buy health insurance doesn't affect
anyone," Mr. Carvin said. "Defaulting on your payments to your
health-care provider does. Congress chose for whatever reason not to regulate
the harmful activity of defaulting on your health care provider," he said.

Justice Kennedy's response contained glimmers of hope for
both sides.

"I agree that that's what's happening here," he
said. While the government asserts the insurance market is unique, "in the
next case, it'll say the next market is unique," he said, cheering the
challengers.

But Justice Kennedy went on to suggest that "most
questions in life are matters of degree." And in a comment that pleased
the health-law's backers, he said uninsured young people are "very close
to affecting the rates of insurance and the costs of providing medical care in
a way that is not true in other industries."

The Supreme Court scheduled three days of arguments on the
law. During initial arguments Monday, the justices sent clear signals that they
believe they can rule on the health-care overhaul now, casting aside a possible
procedural hurdle.

A decision is expected by the end of June.

—Brent Kendall