Supreme court justices hear arguments as healthcare reform showdown begins

First day of US supreme court hearings on 'Obamacare' mix dense legal arguments with pointed questioning from justices
Tea Party demonstrators outside the supreme court
Anti-Obama demonstrators protested outside the US supreme court, demanding the law be struck down as unconstitutional. Photograph: Jacquelyn Martin/AP

The US supreme court heard the opening salvos in the politically charged legal challenge to Barack Obama's healthcare reforms on Monday as the nine justices considered whether they have the authority to take on the case right now.

The first of three days of hearings – the longest of any case in nearly half a century – focused on whether the punishment for not buying mandatory health insurance under the new law is a tax or a penalty.

If it is a tax, then under a 19th century law, the Anti-Injunction Act, the legislation cannot be challenged until the tax is collected beginning in 2015, and the court would not be able to hear the case now. If it is a penalty, the lawsuit can go ahead.

Both the government and the 26 US states challenging the health reform law are keen for supreme court to consider the constitutionality of the legislation now and so they joined in supporting the notion that the consequence of not buying insurance is a penalty.

The broader challenge to Obama's signature healthcare reforms, over whether Congress has the power to oblige almost all Americans to buy medical insurance, the so-called "individual mandate", is the focus of Tuesday's hearing.

Monday's session mixed dense arguments with a barrage of pointed questioning from the justices that seemed to suggest they are prepared to allow the case to go ahead rather than put the issue off for several years.

"This case presents issues of great moment, and the Anti-Injunction Act does not bar the court's consideration of those issues," said the US solicitor-general, Donald Verrilli, representing the government. "Congress has authority under the taxing power to enact a measure not labeled as a tax."

One of the more liberal justices, Ruth Bader Ginsburg, suggested in her line of questioning that she agreed that the measure is not a tax because it is not primarily designed as a means of raising revenue.

"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," she said.

Justice Stephen Breyer, another of the court's liberals, noted Congress's intent in describing the measure as a penalty not a tax.

"Congress has nowhere used the word 'tax'. What it says is penalty. Moreover, this is not in the Internal Revenue Code 'but for purposes of collection'," he said.

The government has already changed position on the issue in an earlier attempt to block legal action in lower courts. At federal court hearings last year it argued that the price of not paying for health insurance is indeed a tax because it is collected on tax returns and that, therefore, those courts were powerless to decide on the legality of the law.

But the Obama administration has come to the supreme court with a different position.

Verrilli said that just because what he called a penalty is "assessed and collected in the same manner" as tax does not make it a tax.

One of the justices, Samuel Alito, picked up on the contradiction in the position of the government, which also argues that Congress has power to impose the "individual mandate" require to buy insurance in part because of its power to levy taxes.

"Today you are arguing that the penalty is not a tax," said Alito. "Tomorrow you will be back and arguing that the penalty is a tax."

Verrilli acknowledged the dual positions but said that Congress's decision to call it a penalty and not a tax mattered for the purposes of Monday's arguments but was not relevant to the broader case on its powers.

"The nature of the inquiry that we will conduct tomorrow is different from the nature of the inquiry that we will conduct today," he said.

The justices repeatedly pressed Verrilli on the implications of his argument for implementation of the health law.

Justice Samuel Alito asked whether the government's argument that the courts are not barred from intervening would not open the door to a flood of legal actions. Verrilli said not.

Alito came back with a claim by two former tax commissioners in a brief filed with the court, saying that the government's "interpretation is going to lead to a flood of litigation".

"Are they wrong on that?" he asked.

Verrilli stood his ground.

At one point, Breyer picked up on Verrilli's repeated refence to the penalty as a tax even though he said it is not a tax.

"If they pay the tax, then they are in compliance with the law," said Verrilli.

"Why do you keep saying tax?" asked Breyer.

"If they pay the tax penalty, they're in compliance with the law," responded Verrilli.

Only Clarence Thomas, the justice thought most likely to vote against the constitutionality of the law, failed to ask any questions.

There was also pointed questioning of the lawyer representing the 26 states challenging the law, Gregory Katsas. He agreed with the government's contention that the supreme court has jurisdiction in the case.

Outside the court, the passions the generated by the case saw doctors and women's rights groups marching in support of Obama's reforms while conservative groups and supporters of the Tea Party movement shouted them down.

"Care for you, care for me, care for every family," charted one clutch of backers of health reform.

A group calling itself the Committee for Justice delivered 12,000 signatures to the court demanding the law be struck down as unconstitutional. Its director, Curt Levy, said it had collected more than 100,000 but the supreme court did not want them delivered all at once.

"If the law's upheld it would truly mean there are no limits to federal government power," he said. "Unfortunately Obama rammed through something that has the support of only the liberal wing of this country."

The Republican presidential candidate, Rick Santorum, arrived to make political capital out of the hearing by saying that the front runner for his party's nomination, Mitt Romney, would not be able to challenge "Obamacare" because he introduced a similar law as governor of Massachusetts.

"If you really want Obamacare repealed, there's only one person who can make that happen," he said.