The health care individual mandate case is difficult for the supreme court. First, it's a high profile case, so people are going to focus on the politics, which is always a problem for the supreme court, which focuses on legal issues. But circumstances have conspired to make this case extra hard.
One of the difficulties, ironically, is that the plaintiffs - 26 states plus a independent business group - actually agree with the defendant, the federal government, on key issues. Why is agreement a problem? Well, the U.S. legal system is designed to be adversarial, which helps the courts because the two opposing sides can normally be relied upon to illuminate both sides of a question. When they agree, the court risks making a decision without full knowledge of opposing views. On these issues the court has appointed counsel to represent the other side; that is better than nothing, especially where the other side is the lower court ruling, but still not ideal since the counsel still isn't representing a real party with real interests.
The first of these issues is whether the suit can be decided at all, since federal law prohibits suits regarding taxes until after the taxes have actually been paid. If the mandate and the penalty for not obeying it were interpreted as merely additional income tax on those without health insurance, the lawsuit would likely not be permitted, and could be dismissed on that basis. That would allow the court to punt on the issue until at least 2015, by which time Congress might have solved the problem for them.
Unfortunately for the supreme court, neither the 26 states bringing the lawsuit against the federal government, nor the federal government itself, agree with that interpretation. The states say the individual mandate is a requirement even apart from the financial penalty, and violation of that requiremen could be interpreted, for example, as a parole violation in some cases, making a lawsuit ripe even if the penalty is a tax. The federal government agrees that lawsuit should be decided now, but uses a different rationale: they argue that the penalty is not a tax, though they then attempt to draw a fine line, saying that even though the penalty is not a tax, it still causes the law to fall under the federal government's taxation powers. With the majority of the states, and the federal government, against it, ducking the question now becomes difficult for the court.
Of course, insistence that the penalty isn't a tax makes constitutional justification for the law under the federal government's taxation powers rather shaky. The oral arguments focused instead on constitutional justification based on the federal government's power to regulate commerce. That part of the argument is at least straightforward: either the commerce clause allows the federal government to force individuals to buy insurance even if a few might never actually use health care services, or the commerce clause does not allow that and the individual mandate is unconstitutional.
If the individual mandate is unconstitutional, though, another mess is opened, ironically in another area where the states and the federal government are partly in agreement. Normally the court would only strike the part of the law that was unconstitutional, but the law explicitly says that the individual mandate is key to several other provisions of the law, which the federal government says should also be stricken if the mandate is stricken. The states argue that additional parts of the law that are closely related economically - a relation that seems particularly germane if the justification for the law is regulation of commerce - should also be stricken, preferably striking the entire law.
Now, there are a few parts of the law that are largely unrelated to the individual mandate - basically riders that were likely tacked on to get the votes needed to pass the law. There are also large swathes of uncharted territory in the law that may or may not be related to the individual mandate in varying degrees. Justice Scalia likens making his law clerks try to figure out where the line should be drawn through the entire 2700 pages of the law to "cruel and unusual punishment". Justice Kagan jokes that Scalia's clerks would have the easy job because he just pays attention to the text of the law - her clerks might have to comb through the legislative background as well. And even if they could come up with a line, it might cause problems for Congress: if Congress wanted to, it might be able to pass the original compromise from scratch and make it constitutional by replacing the penalty with a financially identical tax, but if the supreme court leaves standing even unrelated provisions of the law, passage of those provisions could no longer be used as incentives to get legislators on board to vote for the entire package.
All this complexity suggests that this case has a high risk of becoming a prime example of the adage "hard cases make bad law". Because the details of the case are difficult to resolve, the resolution is likely to be messy - and legal messes can fester for a very long time. Wiping the slate clean and starting over might be the best approach - if the supreme court is willing to take the heat for doing that.
Oral argument transcripts: