The narrowly delineated decision was a victory for President Obama and Congressional Democrats, with a 5-to-4 majority, including the conservative chief justice, John G. Roberts Jr., affirming the central legislative pillar of Mr. Obama's presidency.
Chief Justice Roberts, the author of the majority opinion, surprised observers by joining the court's four more liberal members in the key finding and becoming the swing vote. Justice Anthony M. Kennedy, frequently the swing vote, joined three more conservative members in a dissent and read a statement in court that the minority viewed the law as “invalid in its entirety.”
The decision did significantly restrict one major portion of the law: the expansion of Medicaid, the government health-insurance program for low-income and sick people, giving states more flexibility.
The case is seen as the most significant before the court since the Bush v. Gore ruling, which decided the 2000 presidential election.
In addition to its political reverberations, the decision allows sweeping policy changes affecting one of the largest and fastest-growing sectors of the economy, touching nearly everyone from the cradle to the grave.
The political fight over health care remains far from over, with Republicans campaigning on a promise to repeal the law, which they see as an unaffordable infringement on the rights of individuals. The presumptive Republican presidential nominee, Mitt Romney, has promised to undo it if elected.
Chief Justice Roberts wrote that the decision offers no endorsement of the law's wisdom, and that letting it survive reflects "a general reticence to invalidate the acts of the nation's elected leaders."
"It is not our job to protect the people from the consequences of their political choices," he wrote.
The court’s ruling is a crucial milestone for the law, allowing almost all of its far-reaching changes to roll forward. Several of its notable provisions have already taken hold in the past two years, and more are imminent. Ultimately, it is intended to end the United States' status as the only rich country with large numbers of uninsured people, by expanding both the private market and Medicaid.
The key provision that 26 states opposing the law had challenged – popularly known as the individual mandate – requires virtually all citizens to buy health insurance meeting minimum federal standards, or to pay a penalty if they refuse.
Many conservatives considered the mandate unconstitutional under the commerce clause, arguing that if the federal government could compel people to buy health insurance, it could compel them to buy almost anything -- even broccoli, the archetypal example debated during the oral arguments three months ago.
In a complex decision, the court found that Congress’ powers to regulate commerce did not justify the mandate. But it reasoned that the penalty, to be collected by the Internal Revenue Service starting in 2015, is a tax and is not unconstitutional.
Chief Justice Roberts, in the majority, said that the mandate was unconstitutional under the Constitution’s commerce clause. But that did not matter if the penalty that enforces it was constitutional on other grounds.
The court’s four liberals made it clear that they disagreed with the chief justice's view of the commerce clause, but joined him because the effect of his ruling was to let the law stand.
The Obama administration had said in court in 2010 that the mandate could be upheld under the taxation powers, which it called even more sweeping than the federal power to regulate interstate commerce.
It was needed, the government said, because it allowed other provisions to function: those overhauling the way insurance is sold, and preventing sick people from being denied or charged extra for insurance.
The mandate’s advocates said it was necessary to ensure that not only sick people but also healthy individuals would sign up for coverage, keeping insurance premiums more affordable. The law offers subsidies to poorer and middle-class households, varying with their incomes. It also provides subsidies to some businesses for insuring their workers.
The court upheld a major expansion of Medicaid intended to add millions of low-income people to its rolls, but limited the power of the federal government to enforce this provision by penalizing states that refuse to go along.
Chief Justice Roberts said the federal government could not compel states to comply by cutting off all the federal money they receive for existing Medicaid programs. That aid is more than 10 percent of state budgets.
The threatened loss of so much federal money “is economic dragooning that leaves the states with no real option but to acquiesce in the Medicaid expansion,’’ the chief justice said. “A state could hardly anticipate that Congress’s reservation of the right to ‘alter’ or ‘amend’ the Medicaid program included the power to transform it so dramatically.’’
Congress can offer money to the states to expand Medicaid and can attach conditions to such grants, the chief justice said. But, he added, “What Congress is not free to do is to penalize states that choose not to participate in that new program by taking away their existing Medicaid funding.’’
By allowing the march toward universal coverage to continue, the court kept within sight a goal that has eluded legislators and presidents – including Franklin Delano Roosevelt, Harry S. Truman, Lyndon B. Johnson, Richard M. Nixon and Bill Clinton – for generations.
The decision came on the last day of the term, which the justices extended by three days to deal with the crush of major issues. On Monday, the court overturned several parts of an Arizona law intended to crack down on illegal immigrants, which the Obama administration opposed, while allowing one notable provision to stand.
That Chief Justice Roberts provided the decisive vote the liberals needed was a surprise. He also joined liberal justices, and Justice Kennedy, this week in throwing out portions of Arizona's tough immigration law.
Before this week, the Roberts court has delivered a series of major victories to conservatives, including the Citizens United campaign finance decision, which on Monday it declined to reconsider. In next year’s term, it could take up other major issues; it has agreed to hear a case on affirmative action, and may also consider same-sex marriage and the Voting Rights Act.
In an extraordinary series of oral arguments in March, the differences on the bench that the court had to bridge, if not the ultimate outcome, were disclosed in sharp relief. Until those arguments, many observers – within the White House and beyond – had seen the law as likely to survive a legal challenge that even many Republicans once viewed as a long shot.
But the skeptical questioning by a majority of the justices – and Justice Kennedy in particular – called that view seriously into doubt, as did a somewhat halting presentation by the administration’s advocate. Rulings by appeals courts had split on the main questions, with two courts upholding the law and one striking down the mandate.
A fourth appeals court deferred consideration of the law until 2015, reasoning that the courts lacked jurisdiction until the first penalties enforcing the mandate came due. Although there were some exceptions, in the lower courts most judges appointed by Democrats voted to uphold the law, while most appointed by Republicans voted to reject at least part of it. With Thursday’s ruling, Chief Justice Roberts joined the roster of Republican appointees who voted to uphold the law.