US judge rejects key part of Obama healthcare law

US: A US judge in Virginia Monday declared a key part of President Barack Obama’s landmark healthcare law unconstitutional in the first major setback on an issue that will likely end up at the Supreme Court.

US District Judge Henry Hudson, appointed to the bench by President George W. Bush in 2002, backed the state of Virginia’s argument that Congress exceeded its authority by requiring Americans to start buying health insurance in 2014 or face a fine.

“This dispute is not simply about regulating the business of insurance or crafting a scheme of universal health insurance coverage it’s about an individual’s right to choose to participate,” Hudson wrote, adding the provision invites an “unbridled exercise of federal police powers.”

But he declined to invalidate the entire healthcare law, a small victory for Obama, whose administration will appeal the decision.

The law is a cornerstone of Obama’s presidency, aiming to expand health insurance to cover millions of uninsured Americans while trying to curb costs.

Obama told the Tampa television station WFLA he was confident the courts would uphold the healthcare act.

“The majority of courts that have looked at this issue so far are absolutely convinced that the healthcare (act) is constitutional,” he said.

Healthcare insurers, which include companies such as Aetna Inc and WellPoint Inc, largely opposed Obama’s reforms but say the individual mandate is critical so additional customers can offset greater industry costs.

Health insurers’ stock prices initially rose on the ruling before later tapering off as investors saw more uncertainty as the case proceeds. The ruling signaled that changes to the bill rather than a full overhaul are more realistic.

“Investors are taking this in stride knowing this is probably going to come down to the Supreme Court sooner or later,” said Morningstar analyst Matthew Coffina.

“This really only adds to that uncertainty in terms of not really being sure if and when and how the legislation can be implemented.”

Virginia’s lawyers argued that the federal government could not regulate someone for not buying a good or service under the U.S. Constitution’s Commerce Clause and could not penalize them for failing to buy health insurance.

“This lawsuit is not about healthcare. It’s about liberty,” said Virginia Attorney General Ken Cuccinelli. He said he had discussed with the Justice Department ways to accelerate the appeals process to try to minimize uncertainty in the states and in the industry.

Representative Eric Cantor, set to become majority leader in the House of Representatives, called for sending the case immediately to the Supreme Court. He said he would push the House to pass a repeal of the law next year.

However, chances of a repeal are slim because Democrats will still control the Senate. It could take more than a year for the case to get to the Supreme Court.

Officials said the administration will keep implementing the rest of the law while it works through the legal questions of the individual mandate. Virginia had requested an injunction to block implementation of the entire law, but the judge did not grant it.

Washington, Tuesday, Reuters