A divided US Supreme Court today upheld the centerpiece of President Barack Obama's signature healthcare overhaul law that requires that most Americans get insurance by 2014 or pay a financial penalty.
"The Affordable Care Act's requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterised as a tax," Chief Justice John Roberts wrote for the court's majority in the opinion.
"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 vote was 5-4.
The conservative Justice 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 found that Congress exceeded its constitutional power by enacting a provision of the law that requires states to dramatically expand the Medicaid health insurance programme 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," Justice Roberts wrote.
The decision in favour of President Barack Obama's 2010 health care overhaul is a major triumph for the president just over four months before he seeks re-election.
The US health care system's biggest overhaul in nearly 50 years, the law aims to provide medical insurance to more than 30 million previously uninsured Americans and to slow down soaring medical costs.
The United States spends more on health care than any other nation, but about 50 million of the roughly 310 million Americans have no insurance at all.
Mr Obama seeks re-election on November 6th against Mitt Romney. The Republican challenger 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.
A key component of the law was challenged by 26 of the 50 states and by a trade group for small businesses on the grounds that Congress exceeded its powers under the US Constitution by requiring people to obtain insurance by 2014 or pay a penalty.
Mr 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, however, who dubbed it 'Obamacare'. Critics say it meddles in people's lives and in the business of the states.
Shares of hospital chains jumped after the ruling. Hospital company Community Health Systems jumped 8 per cent, while Tenet Healthcare Corp rose almost 5 per cent. Shares of health insurers were mixed.
Large diversified companies such as Aetna Inc and WellPoint were off 4 per cent and 6 per cent, respectively. But insurers that specialise in Medicaid jumped, with Amerigroup Corp climbing 4.6 per cent, and Molina Healthcare up 7.6 per cent.
Reuters