UPDATE 1-US, states spar in Florida court over health law

* Judge says can’t give timeframe for ruling

* 20 states say insurance requirement is unconstitutional

* Judge suggests law would be ‘a giant leap’ (Adds detail, quotes, background, byline)

PENSACOLA, Fla., Dec 16 (Reuters) - Attorneys for the Obama administration and 20 U.S. states sparred in court on Thursday over whether the new healthcare law oversteps constitutional limits on federal authority by requiring most Americans to buy medical insurance.

Following three hours of testimony, U.S. District Judge Roger Vinson said he planned to make a decision “as quickly as possible, but noted the case will take time to examine. “I cannot give you a date certain.”

The lawsuit claimed that the sweeping reform of the $2.5 trillion U.S. healthcare system oversteps constitutional limits on federal power and would force massive spending on hard-pressed state governments.

The dispute over the plan, which was pushed through by Obama’s fellow Democrats in the U.S. Congress after months of bitter partisan wrangling, will very likely be decided by the U.S. Supreme Court.

Two judges have rejected challenges to the law. On Monday, another judge backed the state of Virginia’s argument that Congress exceeded its authority by requiring Americans to start buying health insurance in 2014 or face a fine.

Throughout the arguments in Florida, the judge repeatedly returned to the issue of whether Congress can force individuals to purchase a product or face penalties if they don’t.

“It would be a giant leap,” Vinson said.


The Florida case also argues that the law unconstitutionally expands Medicaid, the federal-state program that provides healthcare for the poor and disabled.

Under the healthcare law, 18 million more people would become eligible for Medicaid, which would require states to spend more money on the program, said Blaine Winship, lead attorney for the plaintiffs.

Though originally crafted as a voluntary program, Medicaid has become so large that states have no practical alternative but to participate, Blaine told the judge.

The federal program, which on average pays about 55 percent of Medicaid costs, pumps $251 billion a year to the states. It is the largest single federal grant and aid program to states.

Justice Department attorney Ian Gershengorn argued that Congress has authority to regulate the parameters of the Medicaid program and the courts have repeatedly upheld expansions of the original safety net program.

The healthcare law is a cornerstone of Obama’s domestic agenda and aims to expand health insurance for millions more Americans while curbing costs. Administration officials have insisted it is constitutional and necessary to stem huge projected increases in health care costs.

Plaintiffs’ attorney David Rivkin said requiring individuals to obtain medical coverage would be a “radical interpretation” of federal power to regulate commerce by allowing individuals to be punished for not doing something.

Gershengorn countered that the nation’s $2.5 trillion health care market is unique because participants receive health care whether they pay for it or not.

“The decision to finance your healthcare services out of pocket or by insurance is not inactivity,” Gershengorn said. “The decision to run the risk of incurring healthcare cost without paying for them and relying on other people to pick up the tab is not inactivity.”

Plaintiffs in the lawsuit include the National Federation of Independent Business, which describes itself as the leading association representing small U.S. businesses in America.

In addition to Florida, states joining in the lawsuit include Alabama, Alaska, Arizona, Colorado, Georgia, Idaho, Indiana, Louisiana, Michigan, Mississippi, Nebraska, Nevada, North Dakota, South Carolina, South Dakota, Pennsylvania, Texas, Utah and Washington. (Editing by Jane Sutton and Tom Brown)