Supreme Court divided on whether Obama health care ruling must be all-or-nothing

The Supreme Court justices appeared sharply divided Wednesday over whether they would have to kill President Barack Obama's landmark health care overhaul outright if they decree that the measure requiring individuals to have insurance or pay a penalty is unconstitutional.

"If the individual mandate is unconstitutional, then the rest of the act cannot stand," the lawyer opposing the law on behalf of 26 states, Paul Clement, said as the nine justices began their third and final day of oral arguments on the Patient Protection and Affordable Care Act.

[Audio: Supreme Court oral arguments on all-or-nothing issue]

Justice Sonia Sotomayor, an Obama appointee, challenged Clement right out of the gate, asking why the court should wipe out the entire law rather than let lawmakers make the necessary adjustments.

"Why shouldn't we let Congress do that?" Sotomayor said, stressing that lawmakers "should be fixing this."

"No matter what you do in this case," Clement said, "there is going to be something for Congress to do."

Justice Ruth Bader Ginsburg, a Clinton appointee, questioned whether the court should be involved in "a wrecking job" rather than leave Congress "a salvage operation."

Clement argued that the individual mandate lies "at the very heart of this act," and that the legislation cannot function without it and therefore should be thrown out in its entirety.

Conservative Justice Antonin Scalia agreed.

"My approach would say 'if you take the heart out of the statute, the statute's gone.' That enables Congress to do what it wants in the usual fashion. And it doesn't inject us into the process of saying, 'this is good, this is bad, this is good, this is bad,'" Scalia said. "It seems to me it reduces our options the most and increases Congress's the most."

[Related: Supreme Court justices tear into health care mandate]

But Chief Justice John Roberts seemed less sure, noting that many provisions that would be scrapped in an all-or-nothing approach "have nothing to do with any of the things we are talking about" at the core of the case.

Still, Roberts resisted going through the law to pick and choose what should be salvaged and what should end up definitively on the scrap heap.

The Obama administration argues that the individual mandate is constitutional, but says that if the court strikes that element down it should kill only provisions requiring health insurance companies to cover people with preexisting conditions and restricting the cost of premiums to some sick or elderly customers. Insurers backed the individual mandate as a tool to bring healthy and therefore low-cost Americans into their pool of customers, compensating for the requirement to cover higher-risk Americans.

Deputy Solicitor General Edwin Kneedler, making that case after Clement spoke, argued that the court should let the rest of the law stand.

"The court should leave it to Congress" what steps to take to make the act work if the individual mandate goes, Kneedler argued, saying that was how the Constitution envisions the separation of powers. "Only a few provisions are inseverable from the minimum coverage provision," meaning that they would have to go if that requirement goes, he added.

[Related: Can Obamacare survive without the individual mandate?]

But Justice Anthony Kennedy, widely seen as a critical swing vote on the divided court, worried it might be "a more extreme exercise of judicial power" if the court picks and chooses parts of the law to strike down rather than returning a blank slate to Congress.

"I just don't accept the premise," Kennedy said.

Kneedler suggested that the court weigh individual elements in the law to see whether they stand or fall if the individual mandate is unconstitutional. That drew an astonished exclamation from Scalia, who asked: "You really want us to go through these 2,700 pages? And do you really expect the court to do that? Or do you expect us to—to give this function to our law clerks?"

"Is this not totally unrealistic? That we are going to go through this enormous bill item by item and decide each one?" Scalia asked, drawing laughter from the audience.

In response, Justice Elena Kagan took a shot at Scalia's frequent contention that he chiefly considers the text of a law in his rulings.

"For some people, we look only at the text. It should be easy for Justice Scalia's clerks," she quipped.

"I don't care whether it's easy for my law clerks, I care whether it's easy for me," Scalia replied.

Justice Stephen Breyer, a Clinton appointee, waded in with a long-shot idea for a compromise that drew immediate laughter from the crowd.

"Do you think it's possible for you and Mr. Clement, on exploring this, to get together and agree, I mean, on a list of things" that cannot be detached from the individual mandate, Breyer asked Kneedler. "Is that a pipe dream?"

"I ... I ... I just don't think that's realistic," Kneedler replied.

Updated at 2:11 p.m. ET.

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