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Court signals entire health care law might need to be struck down

Updated at 6:45 p.m. ET  In the Supreme Court’s final day of arguments on the constitutionality of the 2010 health care law, the justices wrestled Wednesday with what happens to the law if they strike down the provision that requires the uninsured to buy insurance.

“I think a majority of the court believes that if it rules that individual mandate is unconstitutional, then the rest of the health care law probably cannot be saved,” reported NBC’s Pete Williams after hearing the 90 minutes of oral argument.

“It would seem that a majority of the court -- again, breaking down along the familiar lines -- believes ... it would be a very difficult, almost impossible, chore to figure out which parts of the law could still be saved,” Williams reported.

Read a transcript of the afternoon oral arguments here (.pdf)

At issue before the court on Wednesday was “severability” -- a principle that holds that if one part of a law is ruled unconstitutional, the remaining parts of the law can stay in force.

Williams reported that the justices were “very concerned” about the effects on the insurance industry of leaving intact the obligations imposed on it to offer coverage to all who seek it without the source of income from the individual mandate.

“They are very worried about saddling the insurance industry with that,” he said.

Read a transcript of the morning oral arguments here (.pdf)

Arguing that Congress ought to be given the opportunity to repair the bill if the court strikes down the individual mandate, Justice Sonia Sotomayor asked, “In a democracy structured like ours, where each branch does different things, why we should involve the Court in making the legislative judgment?”

Paul Clement, the attorney representing the states who oppose the law, told the justices, “I think you do want to strike it all down to avoid a redux of Buckley," -- a reference to the 1976 Buckley v. Valeo campaign finance decision that struck down congressional limits on campaign spending but retained the limits on campaign contributions.

Arguing for the Obama administration, Deputy Solicitor General Edwin Kneedler said “as a matter of judicial restraint,” the court should not invalidate the entire law if it strikes down the individual mandate.

But Justice Anthony Kennedy said the court would be exercising too much power if it threw out the mandate but other provisions “remained to impose a risk on insurance companies that Congress had never intended. By reason of this court, we would have a new regime that Congress did not provide for, did not consider."

That, he said, might be "a more extreme exercise of judicial power" than striking down the whole law.

Justice Antonin Scalia seemed to suggest at one point during Wednesday’s argument that Congress might find itself unable to repair what remains of the law if the justices invalidate parts of it. “There is such a thing as legislative inertia, isn't there?” he asked.

Listen to that exchange between Justice Scalia and Paul Clement here (.wav)

Justice Elena Kagan, the former solicitor general in the Obama administration, indicated that she might vote to preserve all other parts of the law except guaranteed issue and other insurance reforms, if the court struck down the individual mandate.

Referring to the new insurance marketplaces, or “exchanges,” which the law sets up, Kagan asked, “Is half a loaf better than no loaf? And on something like the exchanges it seems to me a perfect example where half a loaf is better than no loaf. The exchanges will do something.”

And Justice Ruth Bader Ginsburg told Clement, “There are so many things in this Act that are unquestionably okay ... Why make Congress re-do those?”

Listen to that exchange between Justice Ginsburg and Paul Clement here (.wav)

She told Clement, “Why should we say it's a choice between a wrecking operation, which is what you are requesting, or a salvage job. And the more conservative approach would be salvage rather than throwing out everything.”

The 2010 law does not contain a severability clause so the justices were confronted with the task of trying to ascertain what Congress would have wanted, if it knew that part of the law would be struck down.

The Obama administration argues in its brief that the high court should hold that only two provisions of the act can’t be severed from the individual mandate provision.

The two provisions that the administration says are inseparable are guaranteed issue and “community rating” -- which means insurance premiums do not vary by individuals’ health characteristics or health status.

The Obama administration argues that without the individual mandate, the guaranteed issue and community rating provisions “would drive up costs and reduce coverage, the opposite of Congress’s goals.” They, therefore, can’t be severed from the individual mandate and “must be invalidated if the court finds it unconstitutional.”

Justices express skepticism over constitutionality of health insurance mandate

But all the other provisions in the law “can operate independently and would still advance Congress’s core goals of expanding coverage, improving public health, and controlling costs even if the minimum coverage provision were held unconstitutional.”

Those other provisions include, for example, an increase in the Medicare tax on people who earn more than $200,000 a year, a requirement that children up to age 26 be covered on their parents’ health insurance policy, and an expansion of prescription drug benefits for people on Medicare. 

Also argued Wednesday was the constitutionality of Congress’s expansion of the federal-state Medicaid program for low-income people.

The states traditionally were required to offer Medicaid only to low-income people in certain categories: families with dependent children, the elderly, blind people, the disabled, and pregnant women. But the 2010 law requires states to cover all individuals under age 65 with incomes up to 133 percent of the poverty level.

More than two dozen states are asking the court to strike down the Medicaid expansion on the grounds that the law coerces the states.

The federal government will pay all the Medicaid costs of covering newly eligible people from 2014 to 2016.  After that federal support will decrease, and after 2020), the federal government will pay 90 percent of the costs of covering the newly eligible.

Under prior law, the federal government pays, on average, about 60 percent of the cost of Medicaid coverage.

Pointing to this, Justice Kagan said, “the Federal government is here saying (to the states), we are giving you a boatload of money….There's no matching funds requirement, there are no extraneous conditions attached to it, it's just a boatload of Federal money for you to take and spend on poor people's healthcare. It doesn't sound coercive to me, I have to tell you.”

Chief Justice Roberts said “the concern is that the secretary (of Health and Human Services) has the total and complete say because the secretary has the authority under this provision to say you lose everything (all federal Medicaid funds). No one's suggested in the normal course that will happen, but so long as the Federal government has that power, it seems to be a significant intrusion on the sovereign interests of the State.”

But Roberts also suggested that the states were mostly to blame for letting themselves reliant on federal funds.

“Isn't that a consequence of how willing they have been since the New Deal to take the Federal government's money?” he asked. “And it seems to me that they have compromised their status as independent sovereigns because they are so dependent on what the Federal government has done, they should not be surprised” at the federal government exercising control over them.

The states, Roberts said, “tied the strings, they shouldn't be surprised if the Federal government isn't going to start pulling them.”

NBC's Pete Williams contributed to this report.