The 5-4 decision means the huge overhaul, still taking effect, will proceed and pick up momentum over the next several years, affecting the way that countless Americans receive and pay for their personal medical care.
The ruling hands Obama a campaign-season victory in rejecting arguments that Congress went too far in approving the plan. However, Republicans quickly indicated they will try to use the decision to rally their supporters against what they call “Obamacare.”
Stocks of hospital companies rose sharply, and insurance companies fell immediately after the decision was announced that Americans must carry health insurance or pay a penalty.
Breaking with the court's other conservative justices, Chief Justice John Roberts announced the judgment that allows the law to go forward with its aim of covering more than 30 million uninsured Americans.
The justices rejected two of the administration's three arguments in support of the insurance requirement. But the court said the mandate can be construed as a tax. “Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness,” Roberts said.
The court found problems with the law's expansion of Medicaid, but even there said the expansion could proceed as long as the federal government does not threaten to withhold states' entire Medicaid allotment if they don't take part in the law's extension.
The court's four liberal justices, Stephen Breyer, Ruth Bader Ginsburg, Elena Kagan and Sonia Sotomayor, joined Roberts in the outcome.
Justices Samuel Alito, Anthony Kennedy, Antonin Scalia and Clarence Thomas dissented.
Kennedy summarized the dissent in court. “In our view, the act before us is invalid in its entirety,” he said.
The dissenters said in a joint statement that the law “exceeds federal power both in mandating the purchase of health insurance and in denying non-consenting states all Medicaid funding.”
In all, the justices spelled out their views in six opinions totaling 187 pages. Roberts, Kennedy and Ginsburg spent 57 minutes summarizing their views in the packed courtroom.
The legislation passed Congress in early 2010 after a monumental struggle in which all Republicans voted against it. House Majority Leader Eric Cantor, R-Va., said Thursday the House will vote the week of July 9 on whether to repeal the law, though such efforts have virtually no chance in the Democratic-controlled Senate.
GOP presidential candidate Mitt Romney has joined in calls for complete repeal.
After the ruling, Republican campaign strategists said Romney will use it to continue campaigning against “Obamacare” and attacking the president's signature health care program as a tax increase.
“Obama might have his law, but the GOP has a cause,” said veteran campaign adviser Terry Holt. “This promises to galvanize Republican support around a repeal of what could well be called the largest tax increase in American history.”
Democrats said Romney, who backed an individual health insurance mandate when he was Massachusetts governor, will have a hard time exploiting the ruling.
“Mitt Romney is the intellectual godfather of Obamacare,” said Democratic consultant Jim Manley. “The bigger issue is the rising cost of health care, and this bill is designed to deal with it.”Read the Supreme Court's ruling (pdf)
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