By Lawrence Hurley

Members of the U.S. Supreme Court on Wednesday indicated that Vermont and 17 other states could be prevented from collecting healthcare information from certain employee health plan administrators.

The nine justices heard a one-hour oral argument over whether a 2005 Vermont data collection law aimed at improving the quality of healthcare applies to self-funded insurance plans, which are most commonly used by large companies.

Liberty Mutual Insurance Group Inc, which runs a self-funded plan administered by Blue Cross Blue Shield of Massachusetts, objected when asked to provide data, saying the U.S. Employee Retirement Security Act exempts it from such requirements.

The data includes the type of healthcare services paid for by insurers on medical claims by a patient and how much they paid.

The federal law is intended to protect employers from a patchwork of burdensome state regulations, the company said.

Self-funded plans provide insurance for 93 million Americans, according to the American Benefits Council. They are an alternative to plans in which companies contract with insurance companies, which assume the risk.

Vermont is one of 18 states with a data collection law. Liberty Mutual and its supporters argued such requirements are a particular problem for companies that operate nationally because they have to meet multiple different requirements.

Several justices appeared sympathetic on that point.

"If each state has its own specifications, then that becomes burdensome and costly," Justice Ruth Bader Ginsburg said.

Likewise, Justice Stephen Breyer said that if 50 different states had 50 different laws, it would impose costs on plans "purely for bureaucratic reasons."

Some members of the court seemed sympathetic to Vermont's desire to collect the information.

Justice Elena Kagan questioned whether the financial cost would be as great as Liberty Mutual suggested, indicating the process was mostly automated.

"You can say it's 93 million people, but, you know, in the end, what's the cost?" she said.

A ruling is due by the end of June. The case is Gobeille v. Liberty Mutual, U.S. Supreme Court, No. 14-181.

(Reporting by Lawrence Hurley; Editing by Will Dunham)