Article via CNBC

• The Affordable Care Act seems likely to withstand its third challenge at the Supreme Court.
• During arguments in a case seeking to eliminate Obamacare, two of the court’s conservatives on Tuesday signaled they would not strike down the landmark legislation.
• Chief Justice John Roberts and Justice Brett Kavanaugh suggested that the court may cast aside the individual mandate while leaving the rest standing.

The Affordable Care Act seems likely to withstand its third challenge at the Supreme Court.

During arguments in a case seeking to eliminate Obamacare, two of the court’s conservatives on Tuesday signaled they would not strike down the landmark legislation.

Chief Justice John Roberts, who cast the key vote in 2012 upholding Obamacare, and Justice Brett Kavanaugh, an appointee of President Donald Trump, suggested that the court may cast aside a challenged provision of the law, known as the individual mandate, while leaving the rest of it standing.

Such a decision would leave in place the central aspects of the 900-plus page legislation which have transformed American health-care over the past decade, from the expansion of Medicaid in dozens of states to the requirement that insurers cover those with preexisting conditions.

The individual mandate provision, as enacted in 2010, requires most Americans to obtain health insurance or pay a penalty. The GOP-controlled Congress reduced the penalty to $0 in 2017.

The Supreme Court upheld the mandate in 2012 under Congress’s taxing power, but Texas and other Republican-led states argued that the reduction of the penalty made that justification no longer workable, and as a result the whole Affordable Care Act must be struck down.

The Trump administration, via the Department of Justice, argued in favor of the red states’ challenge.

The court’s six conservatives seemed sympathetic to arguments made by Kyle Hawkins, the Texas solicitor general, and acting Justice Department Solicitor General Jeffrey Wall that the individual mandate became unconstitutional when it was stripped of an accompanying penalty.

But Roberts and Kavanaugh suggested that would not doom the rest of the law.

“I think it’s hard for you to argue that Congress intended the entire act to fall if the mandate was struck down,” Roberts told Hawkins. Roberts was appointed by President George W. Bush.

Roberts acknowledged that some Republican lawmakers may have wanted the Supreme Court to strike down the law, “but that’s not our job.”

Kavanaugh told Donald Verrilli, who was solicitor general under former President Barack Obama, that “I tend to agree with you that this is a very straightforward case” and that under the court’s precedents “we would excise the mandate and leave the rest of the act in place.”

Verrilli was arguing on behalf of the Democratic-controlled House of Representatives.

Later, Kavanaugh told Hawkins that it “sure seems” like Congress in 2017 wanted to lower the individual mandate penalty without getting rid of the Affordable Care Act’s other provisions, such as its protections for those with preexisting conditions.

The court’s three liberals, Justices Stephen Breyer, Sonia Sotomayor and Elena Kagan are expected to side with California and a coalition of other Democratic-led states that are defending Obamacare. Michael Mongan, the solicitor general of California, argued on behalf of the blue states. It takes five votes to gain a majority on the nine-judge panel.

The Democratic-appointees seemed skeptical of the red states’ argument that the mandate was unconstitutional, and sympathetic to California’s claim that those states lacked even the ability to sue, given their failure to prove that they had been harmed by the law.

“The only thing that changed is something that made the law less coercive,” Kagan said.

Breyer suggested that allowing the red states to bring their claim could open up challenges to all sorts of laws that would be unlawful if they included penalties, such as hypothetical statutes calling for citizens to plant trees, clean up yards or buy war bonds.

Health-care activists warned that if the Supreme Court struck down the Affordable Care Act, more than 20 million people could lose their insurance.

The dispute, which was argued in the shadow of last week’s presidential election, was a central focus of Democrats during the confirmation hearings for Justice Amy Coney Barrett last month. Barrett’s questioning on Tuesday didn’t provide much insight into her thinking about the legal issues.

Two lower courts sided with Texas, including the 5th U.S. Circuit Court of Appeals court, that the individual mandate was unlawful. The appeals court did not say whether the rest of the Affordable Care Act would also have to be struck down.

Arguments, which were scheduled to last for 80 minutes, began at 10 a.m. ET and concluded around noon. They were conducted by phone as a result of the Covid-19 pandemic and streamed live to the public.

The case became a political flash point in the race between Trump and President-elect Joe Biden, who have sketched out vastly different visions for the future of American health care. Trump pushed to gut the Affordable Care Act, while Biden’s agenda calls for building on the law, which the former vice president played a role in shepherding through Congress in the first place.

The political stakes were amplified by the pandemic, which has killed more than 230,000 in the U.S. and made health care a more salient issue.

Efforts to contain the pandemic also caused a devastating recession, which has resulted in millions losing their health-care coverage. After the late Justice Ruth Bader Ginsburg, a liberal, died in September, Democrats sought to turn the fight for her replacement, Barrett, into a referendum on the law.

A decision is expected toward the end of June.

The case is known as California v. Texas, No. 19-840