A federal judge in Florida struck down President Barack Obama's landmark healthcare overhaul as unconstitutional on Monday, in the biggest legal challenge yet to federal authority to enact the law.
U.S. District Judge Roger Vinson, appointed to the bench by Republican President Ronald Reagan, ruled that the reform law's so-called individual mandate went too far in requiring that Americans start buying health insurance in 2014 or pay a penalty.
"Because the individual mandate is unconstitutional and not severable, the entire act must be declared void. This has been a difficult decision to reach, and I am aware that it will have indeterminable implications," Vinson wrote.
Referring to a key provision in the Patient Protection and Affordable Care Act, he sided with governors and attorneys general from 26 U.S. states, almost all of whom are Republicans, in declaring it unconstitutional.
"Regardless of how laudable its attempts may have been to accomplish these goals in passing the Act, Congress must operate within the bounds established by the Constitution," the judge ruled.
The administration said it may ask the U.S. appeals court to hold off on any changes in the implementation of the law pending an appeal Judge Vinson's decision. The highly politicized issue will likely end up at the Supreme Court for final determination.
The plaintiffs represent more than half the U.S. states, so the Pensacola case has more prominence than some two dozen lawsuits filed in federal courts over the healthcare law.
The healthcare overhaul enacted last year, a contentious cornerstone of Obama's presidency, aims to expand health insurance to cover millions of uninsured Americans while also curbing costs. Administration officials insist it is constitutional and needed to stem huge projected increases in healthcare costs.
Two other district court judges have rejected challenges to the individual mandate.
But a federal district judge in Richmond, Virginia, last month struck down that central provision of the law in a case in that state, saying it invited an "unbridled exercise of federal police powers."
RULING DRAWS SOME SHARP CRITICISM
There was immediate strong reaction to the ruling.
Ron Pollack, executive director of Families USA, an influential national advocacy group that pushed for the healthcare overhaul, called Vinson's decision an example of "radical judicial activism run amok" and predicted it would be reversed on appeal.
"The decision flies in the face of three other decisions, contradicts decades of legal precedent, and could jeopardize families' health care security," he said in a statement.
Vinson's ruling was dramatically broader than the one in Richmond, however, since his colleague there only struck down the individual mandate requirement and refused to invalidate the entire healthcare law.
It was obvious Vinson struggled with the decision, as he acknowledged that it was "hard to invalidate" the statute.
The individual mandate is key to the law's mission of covering more than 30 million uninsured. Officials argue it is only by requiring healthy people to purchase policies that they can help pay for reforms, including a mandate that individuals with pre-existing medical conditions cannot be refused coverage.
The ruling comes after the U.S. House of Representatives, with a new Republican majority, voted earlier this month to repeal the healthcare reform law.
The repeal measure is unlikely to go any further as the Democratic-controlled Senate is expected to drop it. Since a full legislative appeal seems like non-starter in the current Congress, legal experts all agree the real battle over reform is destined for the Supreme Court.
Shares of U.S. health insurers were little changed after the ruling, with UnitedHealth Group Inc and Aetna roughly flat and WellPoint Inc down 0.8 percent.
"This just adds to the conflicting nature of the rulings that we've seen so far," said Matthew Coffina, an analyst with Morningstar.
"I think everyone watching the industry at this point has been expecting the Supreme Court to ultimately decide this situation, so I think that's the main reason you're not seeing the stocks react one way or another right now," Coffina said.
The states involved in the lawsuit were Alabama, Alaska, Arizona, Colorado, Florida, Georgia, Idaho, Indiana, Louisiana, Michigan, Mississippi, Nebraska, Nevada, Pennsylvania, South Carolina, North Dakota, South Dakota, Texas, Utah, Washington, Iowa, Ohio, Kansas, Maine, Wisconsin and Wyoming.