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

The health law would revamp, in part through the coverage mandate, 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 probably will rule in late June, months before the November election. A ruling against the measure would give ammunition to Obama's Republican challengers, who have said the law should be repealed.

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

The Standard & Poor's Supercomposite Managed Health Care Index 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 Congress can't make everybody have coverage, the justices should toss out sections of the law known as the guaranteed-issue and community-rating provisions. Those sections say insurers must issue policies and set rates without regard to pre-existing health conditions.

'Death Spiral'

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, today pointed to congressional findings supporting that argument. She also 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.”

The 90-minute session featured a clash among several justices as to how the court could be most deferential to Congress. Early on, Justice Sonia Sotomayor said that perhaps the court should excise the mandate, if it's found 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. Striking 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 all 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.

Added Significance

The debate on the rest of the health-care law took on added significance after questions from justices yesterday indicated a majority might rule against the insurance requirement.

Paul Clement, the lawyer for 26 states challenging the health-care law, argued today 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.

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 credits for employers that offer insurance to their workers, he said.

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

If the court rules the individual mandate unconstitutional, it would be faced with “a choice between a wrecking operation, which is what you are requesting, or a salvage job,” Ginsburg told Clement. She said that she would prefer salvaging other parts of the measure.

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 today, the justices will consider a challenge by 26 states that object to a section of the law that expands the federal-state Medicaid health-insurance program for the poor.

Questions from the bench during yesterday's hearing on mandatory insurance coverage indicated the justices may split 5- to-4, with the court's five Republican appointees joining to overturn that part of the law.

Republican Support

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 U.S. Solicitor General Donald Verrilli repeatedly yesterday as he made his case for upholding the law.

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

Because none of the participants supports the appeals court's conclusion, the Supreme Court appointed an outside lawyer, H. Bartow Farr III, to argue that the rest of the statute — including the guaranteed-issue and community-rating sections — should be left in force even if the justices strike down the individual mandate.

In the afternoon argument, the Medicaid issue may be an uphill fight for the states. No lower court judge has accepted their contention that the law unconstitutionally coerces the states into spending their own tax dollars against their will.

The health law's Medicaid expansion is designed to cover 17 million uninsured people by extending eligibility to those with incomes up to 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.

Bloomberg News

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