Transcript for Obamacare Under Fire, Again
week. Inside a lively and intense oral argument. The justices sparring with lawyers over the fate of obamacare. No cameras in the courtroom but the tape-recorders were rolling and ABC's supreme court expert terry Moran has this report on what the questions and answers reveal. Reporter: It was deja Vu all over again this week at the supreme court. That's not what you said previously when you were here last time in this never-ending saga. Reporter: This challenge to the president's sweeping health care law, which survived an attempt to kill it in the supreme court in 2012, boils down to four words, established by the state. That's how the law says people should get obamacare subsidies to pay for insurance if they need the help on insurance exchanges established by the state. But only 16 states have established those exchanges so the federal government stepped in to pay the subsidies and that, opponents say, is against the law. The liberals on the court rushed to the law's defense, look at the overall structure of it, they argued, not these four little words in an obscure section. You're talking about congress hiding, borrowing the phrase of one of my colleagues, a huge thing in a mousetrap. Okay? Reporter: Conservatives rejected that argument and they rejected the notion that 6 million plus Americans who could lose insurance if the court strikes down the law would face disaster. What about congress? You really think congress is just going to sit there while all of these disastrous consequences ensue? Reporter: The key moment, though, may have been when justice Kennedy, the court's crucial vote in so many cases, raised sharp concerns about states' rights with the anti-obamacare arguments. There's a serious constitutional problem if we adopt your argument. The states are being told either create your own exchange or we'll send your insurance market into a death spiral. Reporter: So have conservatives found obamacare's Achilles heel in four words or will the supreme court once again step in and save the law and save so much of president Obama's legacy? For "This week," terry Moran, ABC news, London. Let's talk about it with two experts. Joan biskupic covers the supreme court for reuters, covered the court for a long time and also Michael cannon from the cato institute who filed a brief in the case challenging obamacare. Mr. Cannon, let me begin with you. When you heard those questions from justice Kennedy, were you worried? Well, no, and this isn't a challenge to obamacare. What happened here is the political appointees of the treasury department read the law. They didn't read it before it passed. They read it. They found out that it doesn't work and they pressured the irs to expand its own power under the law, and they're now taxing 57 million Americans illegally. In contravention of the explicit limits on the irs' powers under this statute, and that's what this case is about. The plaintiffs in this case are representing 57 million Americans who are being subjected to illegal taxes. So when justice Kennedy said that, he actually wasn't making a point in the government's favor. He was making a point that he had said a couple of times that the statute may well favor the plaintiffs' interpretation. He was saying that then if that clear language is coercive of the states, then that could be a problem. Let me bring this to Joan bikuspic. It was pretty clear where the four liberals on the court stood during this argument. Also where justices Scalia and alto and Thomas, so it all comes down to Kennedy and the man who didn't say much at all during this question chief justice Roberts. What do you make of that sphinx-like behavior? I think he knew he was being watched because he cast the decisive vote last time and the little he said could have been read slightly more to the government side than not, but as I said, slightly, but I do think Michael cannon underestimates a little bit the power of justice Kennedy's question here. I think that this time around he could, indeed, be the swing vote person. Now, again, as we all know, we have several months before we see a ruling, a lot could go on behind the scenes, votes could shift. But justice Kennedy's concern for this law being coercive on the states, if the court rules for the challengers I thought was significant and, frankly, I think a lot of insurers thought it was significant, and the markets rose on insurance stocks at that question, so I think that there might be some there there. And, Michael cannon, which justice do you think is most likely to join those on your side of either Kennedy or Roberts? Well, both -- Roberts said less, Kennedy made a lot of noises that favored the plaintiffs, and I think that one of them was his concern about coercion. I think there are four Numbers to keep in mind when we're talking about this coercion question, 2, 8, 8 and 2. 2 is the number of benefits that states would get under the plaintiffs' interpretation of the law if they choose not to establish an exchange. They would be totally exempted from the employer mandate and their residence would largely be exempted from the individual mandate. 8 is the number of states that had already enacted this supposedly conservative -- this supposedly coercive penalty before -- on their own insurance markets before it was passed and 8 is also the number of states that said to the supreme court, we prefer this coercive penalty to the cost of compliance, and 2 finally is the number of states that have sued because they prefer in similar challenges because they prefer this supposedly coercive penalty to the cost of compliance. Finally, Joan biscupic, how important it -- we heard the phrase death spiral a lot. How much do you think the justices will take the consequence to their decision on the ground into account? Well, I have to say, George, that they're going to look at precedent and look at the statute itself. But both sides, both the conservatives and liberals, you showed that clip of Scalia talking about potential dire consequences and certainly justice Kennedy thought that way and justice alto also a conservative said if the consequences are going to be so sharp, maybe we should actually postpone the effects of a decision that would go against the government. That's if the decision goes against the government. A lot of tea leaves to sort through. Thank you both very much. Let's bring us back to the roundtable right now. And, mark Halperin, let me begin with you. This may be a case for the challengers, at least those republicans in congress and those running for president of be careful what you wish for because of the consequences of what happens if the supreme court actually does strike down this subsidy scheme. There are ways to fix it if the supreme court does strike it down, but they involve bipartisan cooperation between the president and congressional leaders, and that hasn't been very easy to come by. You know, it will be a bit of a game of chicken. Republicans will say to the president if it's struck down we'll negotiate with you but we want a lot. We want a lot in terms of changing how the affordable care act works. The president may decide to take the chaos and blame it on the republicans. Donna, the white house has been very clear and the secretary of health and human services there's no backup plan, there's no plan B is that really tenable? I think so. 8 million Americans will be impacted by this court decision. Already on the house side, chairman Paul Ryan, he's trying to get the republicans to focus, focus, focus. The problem is the republicans might not even come up with a plan B that the white house can even start looking at. For now it's going to throw a lot of chaos into the process. Does this put more pressure on republican candidates for president to come up with affirmative plans on what to do about health care? Well, it's an opportunity and I think it'll set apart people like Scott walker and Jeb bush governors who have governed in their state from people that, you know, I think come into the race with a more political posture but I think the chaos, this is not one to blame on the republicans, the chaos was born out of the extremely partisan nature with which the bill was crafted and the extremely partisan nature with which it was ran through congress. So I think that any chaos that ensues is squarely the blame lays squarely with the white house. Republicans however have been the primary critics of obamacare. If the court overturns it, it will be incumbent on republicans to offer a real alternative and that is something they have talked about doing for years and they can't even come up with let alone coming up with an alternative that both sides can agree on they can't even come up with an alternative they agree on within the party. I think republicans will come together. Paul Ryan has spent a lot of time thinking about this. Republicans interested in governing -- The court will rule 6-3 and uphole it. I don't know if it'll be 6-3 but I think the court will uphold it. Don't know. I think they'll uphold it and say the irs interpretation -- And they could change up the next president. Right. Roberts -- I want my question mark back. I don't know what the supreme court is going to do. And neither do they. Neither do they. None of us do. And we can all be misled by the questions and answers. We should say that, as well.
This transcript has been automatically generated and may not be 100% accurate.