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* Chief Justice Roberts, Justice Kennedy could be pivotal
* Court's ideological divide apparent during arguments
* Supreme Court ruling may influence Nov. 6 elections
* Ruling on fate of the 2010 law expected by late June
By Joan Biskupic and James Vicini
WASHINGTON, March 27 The Obama administration faced skeptical questioning from a U.S. Supreme Court dominated by conservatives on Tuesday during a tense two-hour showdown over a sweeping healthcare law that has divided Americans.
A ruling on the law's key requirement that most people obtain health insurance or face a penalty appeared likely to come down to Chief Justice John Roberts and Justice Anthony Kennedy, two conservatives who pummeled the administration's lawyer with questions.
But Roberts and Kennedy also scrutinized the two attorneys arguing against the 2010 law, which is considered President Barack Obama's signature domestic policy achievement.
The two pivotal justices on the nine-member court asked highly nuanced questions on Tuesday, the second of three straight days of oral arguments. They seemed torn on whether it would be more of a break from past cases to strike down the so-called individual mandate to obtain insurance or to uphold it.
Aggressive in their questioning of both sides, the justices fired off hard-hitting queries about the limits of the federal government's power and whether it could even extend to requiring eating broccoli and buying gym memberships or cars.
While conservative justices took aim at the insurance mandate, liberal justices supported it.
The administration's lawyer, Solicitor General Donald Verrilli, told the justices that Congress, in passing the law, was trying to address the troubling problem of shifting costs from people who are uninsured to those who purchase coverage, arguing "the system does not work" and lawmakers were addressing "a grave problem."
At stake is the power of Congress to intervene in one of U.S. society's most difficult problems - soaring healthcare costs and access to medical care. Annual U.S. healthcare spending totals $2.6 trillion, about 18 percent of the annual gross domestic product, or $8,402 per person.
Roberts, leader of the five conservatives but far from the most conservative of them, noted at one point that "since the New Deal" policies of President Franklin Roosevelt in the 1930s, the court has accorded Congress broad regulatory power.
Yet he and Kennedy seemed to asked: Had Congress gone too far here, exceeding its authority under the U.S. Constitution?
They signaled they would uphold the individual mandate only if they believed they were not giving Congress broad new powers over people's lives.
JUNE RULING EXPECTED
The justices are likely to issue a ruling on the case in June when the court traditionally recesses for the summer.
The court's decision on the insurance requirement provision, which takes effect in 2014, could decide the fate of the massive multi-part healthcare overhaul meant to improve access to medical care and extend insurance to more than 30 million people.
The ruling would come just months before Obama seeks re-election on Nov. 6. The law was passed when Congress was controlled by Obama's fellow Democrats after a contentious battle with Republicans dead set against it. The Republican candidates vying for their party's nomination to challenge Obama in November all denounce the law.
Challenging the law in court are 26 of the 50 U.S. states and a small-business trade group. The law is reviled by U.S. conservatives who say it infringes on individual freedom.
While activists on both sides expressed confidence they would prevail, it was unclear from the arguments how the court would rule. If the five conservative justices remain unified, the law would fall. If even one conservative joins the four liberals, the law would be upheld.
Tuesday's session was far more intense than Monday's arguments when the justices appeared willing to overcome questions about whether tax law prevented them from considering the case for several years.
Under harsh questioning, Verrilli insisted the case stood out because the insurance market covers virtually everyone.
Verrilli said in reference to the law: "The Affordable Care Act addresses a fundamental and enduring problem in our healthcare system and our economy."
Roberts and Kennedy were also piercing in their questions to the two lawyers challenging the individual mandate about the government's contention that Congress is validly regulating people who already are in the market because virtually everyone is going to need healthcare at some point.
"That's my concern in the case," Kennedy said, noting that young, uninsured people affect the overall market by not paying into it and ultimately receiving care over the long term.
In a similar vein, Roberts said at one point that the healthcare market could be viewed as different from that for cars or other products because everybody is in it.
COURT AND COUNTRY DIVIDED
Views of Obama's healthcare law that have long divided Democrats and Republicans across the country played out also in the ornate courtroom.
The four liberal justices, Stephen Breyer, Ruth Bader Ginsburg, Sonia Sotomayor and Elena Kagan, all indicated that they believed the mandate valid under the U.S. Constitution. Two conservatives, Antonin Scalia and Samuel Alito, were vocal in their skepticism about the requirement.
Scalia in particular seemed concerned that Congress and the federal government would have unlimited powers if the law was upheld. "What is left? If the government can do this, what else can it not do?"
The ninth justice, conservative Clarence Thomas who is expected to vote against the law, asked no questions. Thomas last asked a question from the bench more than six years ago.
Kennedy, who often casts the decisive vote on the court, voiced concern about changing the relationship between government and the people governed by it "in a very fundamental way."
"Do you not have a heavy burden of justification to show authorization under the Constitution?" he asked Verrilli.
Outside the white marble courthouse, a crowd of supporters and protesters filled the wide sidewalk, marching, chanting and carrying signs. A motorcycle shop manager from Massachusetts, Michael Wade, called the healthcare law a "power grab" by Obama. Supporters of the law marched and chanted: "We love Obamacare."
No past rulings are completely on point and many observers have speculated about how the ideologically divided justices will decide the limits of congressional power to address society's most intractable problems. Not since 1936 has the Supreme Court struck down a major piece of federal economic legislation as exceeding congressional power.
Shares of health insurers and hospital companies closed mixed on Tuesday, with the Morgan Stanley Healthcare Payor index of insurers just off slightly.
Large insurer UnitedHealth Group was up 0.6 percent, while shares of WellPoint fell 0.4 percent hospital chain Community Health Systems was down 1.2 percent and those of rival Tenet Healthcare were off 2.3 percent.
Taking up the challenge of fighting for and against the insurance mandate were three of the country's top appellate lawyers, including Verrilli for the administration and Paul Clement, one of his predecessors as the government's top courtroom lawyer during the Bush administration.
Verrilli took a low-key approach in his arguments and at times the liberal justices, notably Kagan and Ginsburg, tried to bolster his points and counter a barrage of skeptical questions from the conservatives.
Coming to Verrilli's aid at one point, Ginsburg stressed that healthcare was more about timing, that healthy people pay in now and take it out when needed. "That's how insurance works."
Clement, arguing on behalf of the states challenging the law, said Congress went too far and that the individual mandate "represents an unprecedented effort" that has no limiting principles.
A new New York Times/CBS News poll showed that a narrow majority of Americans oppose the individual mandate, 51 percent to 45 percent, but strongly supported other provisions of the law covering pre-existing medical conditions and allowing young adults to stay on their parents' health insurance plans.
On its website the Supreme Court posted the audio of the oral argument as well as a transcript: here
The Supreme Court cases are National Federation of Independent Business v. Sebelius, No. 11-393; U.S. Department of Health and Human Services v. Florida, No. 11-398; and Florida v. Department of Health and Human Services, No. 11-400. (With additional reporting by Jeremy Pelofsky and Ian Simpson in Washington and Lewis Krauskopf in New York; Editing by Howard Goller and Will Dunham)
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