(Reuters) — The United States Supreme Court on Thursday upheld the centrepiece of President Barack Obama's signature health-care overhaul law requiring that most Americans get insurance by 2014 or pay a financial penalty, a historic ruling that gave the White House a big win ahead of Obama's re-election bid in November.
"The Affordable Care Act's requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax," Chief Justice John Roberts wrote for the court's majority.
"Because the Constitution permits such a tax, it is not our role to forbid it or to pass upon its wisdom or fairness," he concluded. The conservative Roberts joined the four most liberal justices to uphold the law's key provision.
The four dissenters, all from the court's conservative wing, were Justices Antonin Scalia, Anthony Kennedy, Clarence Thomas and Samuel Alito. They would have struck down the entire law.
In another part of the decision, the court also found Congress exceeded its constitutional power by enacting a provision of the law that requires states to dramatically expand the Medicaid health insurance program for the poor.
However, the court said this problem is fully remedied by precluding the government from using that provision to withdraw existing Medicaid funds from states for failing to comply with terms of the expansion.
States "must either accept a basic change in the nature of Medicaid or risk losing all Medicaid funding," Roberts wrote. "The remedy for that constitutional violation is to preclude the federal government from imposing such a sanction. That remedy does not require striking down other portions of the Affordable Care Act."
The justices ruled Congress did not have the authority under its power to spend money to require that states expand the number of people eligible for assistance, a move the Obama administration estimates could provide coverage for 17 million uninsured Americans by 2021.
The upholding of the insurance purchase requirement, known as the "individual mandate," was a victory for Obama on the law that aims to extend coverage to more than 30 million uninsured Americans.
The 2010 law constituted the $2.6 trillion U.S. health-care system's biggest overhaul in nearly 50 years.
Critics of the law had said it meddled too much in the lives of individuals and in the business of the states.
Twenty-six of the 50 U.S. states and a trade group representing small businesses challenged the law in court. The Supreme Court in March heard three days of historic arguments over the law's fate.
The court's ruling could figure prominently in the run-up to the November 6 election. Obama is being challenged by Republican Mitt Romney, who had called for scrapping the law and replacing it with other measures even though he championed a similar approach at the state level as Massachusetts governor.
The ruling produced a day of drama at the Supreme Court, as the justices read various parts of the opinions from the bench on the last day of the court's term.
Roberts concluded his 59-page opinion by writing: "The Framers (of the U.S. Constitution) created a federal government of limited powers and assigned to this court the duty of enforcing those limits," he wrote.
"The court does so today. But the court does not express any opinion on the wisdom of the Affordable Care Act. Under the Constitution, that judgment is reserved to the people," he said.
The health-care case produced four different opinions, totaling 187 pages.
U.S. House of Representatives Speaker John Boehner, the top Republican in Congress, renewed his vow to try to repeal the health-care law.
"Today's ruling underscores the urgency of repealing this harmful law in its entirety," Boehner said in a statement just minutes after the court released its ruling. Boehner's Republican-led House will likely vote to repeal the measure, but Obama's fellow Democrats in the Senate are certain to block it.
Obama and his fellow Democrats expended a great deal of energy and political capital in securing congressional passage of the measure over unified Republican opposition. The law is reviled by conservatives, who dubbed it "Obamacare."
The health-care battle has been the most politically charged case before the Supreme Court since 2000, when the justices halted the Florida vote recount in a ruling that gave the Republican Bush the presidency over Democrat Al Gore.
Unlike health care in other rich countries, the U.S. system is a patchwork of private insurance and restrictive government programs that has left tens of millions of people uninsured. The United States pays more on health care than any other country.
Shares of hospital chains jumped after the ruling. Hospital company Community Health Systems Inc jumped eight per cent, while Tenet Healthcare Corp rose almost five per cent.
Shares of health insurers were mixed. Large diversified companies such as Aetna Inc and WellPoint were off four per cent and six per cent respectively.
But insurers that specialize in Medicaid jumped, with Amerigroup Corp climbing 4.6 per cent, and Molina Healthcare Inc up 7.6 per cent.