Obamacare News 2015: Supreme Court Divided on Obamacare With Tax Subsidy Issue as Battleground

The U.S. Supreme Court has found itself sharply divided on ideological lines as it tackled a second major challenge to President Obama's healthcare law.

The nine justices on Wednesday heard 85 minutes of arguments in the case brought by conservative opponents of the law who contend its tax credits aimed at helping people afford medical insurance should not be available in most states.

The justices are divided on the tax subsidy issue in the Affordable Care Act with one justice – Justice Anthony Kennedy – emerging as a likely swing vote in a ruling.

Opponents of the law dubbed Obamacare said tax credits aimed at helping people afford medical insurance should not be made available in most states, according to Reuters.

If the Supreme Court rules in favor of the challengers, this could cripple the law, which is Obama's centerpiece health program.

Justice Kennedy, a conservative, said there would be negative impact if the U.S. government loses the case although he did not indicate how he would vote on the issue.

Chief Justice John Roberts, who cast the swing vote that upheld the law in 2012, also did not indicate how he would vote. Four liberal justices appeared to support Obamacare while conservatives Antonin Scalia and Samuel Alito asked questions sympathetic to the challengers.

If the government loses the case, Reuters reported, up to 7.5 million people in at least 34 states would lose tax subsidies that allow low and moderate income people to purchase private health insurance, according to Avalere Health.

The phrase "established by the state" in the law is the main issue in the case.

Kennedy said if Obamacare allows subsidies only for states that established their own insurance exchanges, it would raise new question on whether the law is unconstitutionally coercive by punishing states that fail to establish exchanges.

"There's a serious constitutional problem if we adopt your argument," Kennedy told the proponents of Obamacare.

On the other hand, he said throwing out subsidies would cause an insurance "death spiral" because premiums would increase.

Most of the 50 states in the U.S. have not created exchanges. Thirteen states and the District of Columbia have them, with another 34 run by the federal government and three operating as state-federal hybrids, according to Reuters.

Scalia said Congress could amend the law to avoid disruption if the government loses the case.

White House spokesman Josh Earnest said there are "no contingency plans that could be implemented that would prevent the catastrophic damage" if the Supreme Court favors the challengers.