WASHINGTON (Reuters) - The Supreme Court on Monday appeared prepared to decide the fate of President Barack Obama's sweeping healthcare law soon, rather than delaying for years a ruling on the mandate that Americans buy insurance or pay a penalty.
In the first of three days of historic arguments, the justices voiced doubt that a U.S. tax law requiring that people pay first and litigate later should postpone a ruling on the legal challenge to the president's signature domestic legislative achievement.
At the core of the healthcare law, signed by Obama in 2010, is a requirement that people obtain health insurance by 2014 or pay a penalty. The question on Monday was whether people can challenge this so-called individual mandate before paying the penalty and seeking a refund.
The Obama administration and the challengers - including 26 of the 50 states - agreed that the case should be decided now. One of the four U.S. appeals courts that ruled on the law prior to the case going to the high court held that the tax law barred the challenges until the penalty was paid. The justices then appointed an outside private lawyer to argue that position.
The nine justices, five appointed by Republican presidents and four by Democratic presidents, plan to hear up to six hours of arguments over three days. They are expected to rule on the case by late June.
The law was passed by Congress when both the Senate and House of Representatives were controlled by Obama's fellow Democrats. The court's consideration of the fate of the law presents high stakes for Obama as he campaigns for re-election on November 6.
U.S. conservatives revile the law, denouncing it as unwarranted government intrusion into the lives of Americans, and the Republican candidates battling to become their party's nominee to challenge Obama have promised to try to repeal it.
In Monday's arguments lasting 89 minutes, justices across the ideological spectrum asked skeptical questions about whether the penalty was indeed a tax. If not deemed a tax, then the justices can move forward to decide the merits of whether the law is constitutional.
"Here, they did not use that word tax," liberal Justice Stephen Breyer said, referring both to lawmakers who crafted the legislation in Congress and to their intent.
Another liberal Democratic appointee to the high court, Justice Ruth Bader Ginsburg, also expressed skepticism. "This is not a revenue-raising measure because, if it's successful, nobody will pay the penalty and there will be no revenue to raise."
Conservative Antonin Scalia was also among those justices who suggested by his questions that allowing the case to go forward would not broadly undercut federal tax policy.
'NO PARADE OF HORRIBLES'
"There will be no parade of horribles," Scalia said, noting that lower court judges would be able to determine when to make exceptions to the usual rules governing general tax penalties and law.
Chief Justice John Roberts, the leader of the conservative majority, observed that the court's past cases cut in both directions and that it was unclear that the case could not go forward.
The law, intended to transform healthcare for millions of people in the United States, has generated fierce political debate. Republican opponents of the law say it will financially burden states, businesses and individuals.
The law has been viewed as the crowning achievement of Obama's domestic legislative agenda, but challengers say Congress exceeded its constitutional power to regulate commerce with the individual mandate.
They argue that government should not force people to pay for a product they have opted against. Critics said it could lead to a wide array of other requirements such as eating broccoli, joining gyms, or buying American-made cars.
The Obama administration counters that virtually every person will need medical care and that those who shun insurance put a disproportionate burden on the system. It defended the law as a response to a national healthcare crisis.
Underscoring how the issue has divided Americans, hundreds of supporters and opponents marched outside the white-marble Supreme Court building across from the U.S. Capitol. People lined up 72 hours in advance to try to get one of the few seats open to the public.
Supporters chanted "We love Obamacare," embracing a term opponents have used to deride the law. One protester against the law, Sally Oljar of Seattle, said: "The day hasn't come when the government can force me to buy a damn thing."
The courtroom, which holds about 400 people, was packed with lawmakers from across the street in Congress, prominent attorneys, top Obama administration officials and those who paid others or waited themselves over the weekend to get a seat in the public gallery.
Among the officials watching in the courtroom were two of Obama's Cabinet members - Health and Human Services Secretary Kathleen Sebelius, who is charged with implementing much of the law, and Attorney General Eric Holder, the head of the Justice Department which has been defending the law in court.
Also present in the courtroom were Republican Senator Jeff Sessions of Alabama, an outspoken critic of the law, and Florida Attorney General Pam Bondi, who has led the challenge to the law by the states.
Outside, Republican presidential hopeful Rick Santorum called a news conference to promise that if elected, he would get Congress to pass a law eliminating Obama's healthcare overhaul. Obama is seeking re-election on November 6.
In the United States, annual healthcare spending totals $2.6 trillion, about 18 percent of the annual gross domestic product, or $8,402 for every man, woman and child.
In the markets, the Morgan Stanley Healthcare Payor index of health insurers was up 2.6 percent in mid-day trading, outperforming a roughly 1 percent rise for the broader market.
Shares of large insurers, such as UnitedHealth Group and WellPoint, were up more than 2 percent, while shares of hospital chains HCA Holdings and Community Health Systems also rose more than 2 percent.
MOMENTOUS SESSIONS
The arguments recalled past momentous sessions, such as the 2000 presidential election dispute between Republican George W. Bush and Democrat Al Gore and the 1974 Watergate tapes case that led to President Richard Nixon's resignation.
The tone of the session was serious as lawyers and justices invoked heavy phrases about jurisdiction and statutory construction. One moment of levity arose when attorney Robert Long noted the healthcare law, which runs to 2,700 pages, was not "a perfect model of clarity," drawing laughter in the courtroom.
Long, appointed by the justices to argue that the case should be delayed, said that federal law "imposes a pay first, litigate later rule that is central to federal tax assessment and collection."
Solicitor General Donald Verrilli, the administration's top courtroom lawyer, urged the justices to decide the merits of the dispute. "This case presents issues of great moment," he said.
Representing the challengers, lawyer Gregory Katsas, argued the case can be decided. "The purpose of this lawsuit is to challenge a federal requirement to buy health insurance. That requirement itself is not a tax."
Eight of the nine justices took part in the vigorous questioning. Only Justice Clarence Thomas, who has not asked a question from the bench for more than six years, said nothing.
On its website the Supreme Court posted the audio of the oral argument as well as a transcript, https://www.supremecourt.gov/oral_arguments/argument_audio_detail.aspx?argument=11-398-Monday
(Additional reporting by Jeremy Pelofsky, Ian Simpson and Lily Kuo in Washington and Lewis Krauskopf in New York; Editing by Howard Goller and Will Dunham)
