By Jeremy Pelofsky and James Vicini
WASHINGTON (Reuters) - A U.S. appeals court on Wednesday upheld President Barack Obama's signature healthcare law, handing a victory to the White House by ruling Congress had the power to require that Americans buy insurance.
The healthcare ruling was the first by an appeals court, and legal experts have said they expect the issue to ultimately be addressed by the Supreme Court later this year or next year, a critical time for Obama as he seeks re-election in 2012.
The U.S. Court of Appeals for the 6th Circuit, based in Cincinnati, ruled that the decision by Congress to require Americans to buy healthcare insurance in 2014 or face a fine was legal under the Commerce Clause of the U.S. Constitution.
"Call this mandate what you will -- an affront to individual autonomy or an imperative of national health care -- it meets the requirement of regulating activities that substantially affect interstate commerce," wrote Judge Jeffrey Sutton who was appointed in 2003 by President George W. Bush.
The law, which aims to provide medical coverage to more than 30 million uninsured Americans, has wide ramifications for the health sector, affecting health insurers, drugmakers, device companies and hospitals.
The law is likely to be a major issue during Obama's re-election campaign and congressional elections. Republicans, who have attacked it as a form of intrusive government power, have sought to repeal the law in Congress, state legislatures and the federal courts.
While Wednesday's decision is an initial victory for the Obama administration, there are still other significant legal challenges pending, including two in which federal judges ruled the insurance mandate unconstitutional. Decisions in those cases are expected in the coming weeks.
The ruling stemmed from a lawsuit filed by The Thomas More Law Center in Michigan on the day Obama signed the measure into law. It argued that Congress could not regulate how Americans pay for healthcare services and insurance.
A federal judge in Michigan upheld the law as legal and the group appealed.
'SUBSTANTIALLY AFFECTS INTERSTATE COMMERCE'
By a 2-1 vote, the appeals court affirmed that ruling. It said those who opt out of buying health insurance were still engaging in commerce because they were paying for healthcare services on their own and thus the law was constitutional.
"Congress had a rational basis for concluding that, in the aggregate, the practice of self-insuring for the cost of healthcare substantially affects interstate commerce," the court majority ruled.
"The provision regulates active participation in the healthcare market, and in any case, the Constitution imposes no categorical bar on regulating inactivity," wrote Judge Boyce Martin, who was appointed by President Jimmy Carter in 1979.
White House senior adviser Stephanie Cutter said the administration was pleased with the ruling.
"There are a number of cases regarding the Affordable Care Act that will continue to be heard in courts nationwide, and at the end of the day, we are confident the constitutionality of these landmark reforms will be upheld," she said.
A representative for the Thomas More Law Center, which filed the lawsuit on behalf individuals who said they were harmed by the law, said they were reviewing the appeals court ruling and had no further immediate comment.
Judge James Graham, the member of the panel who dissented from the decision, said that despite runaway healthcare costs being a national problem, that "does not mean that Congress can try to solve them in any fashion it pleases."
"If the exercise of power is allowed and the mandate upheld, it is difficult to see what the limits on Congress's Commerce Clause authority would be. What aspect of human activity would escape federal power?" wrote Graham, appointed in 1986 by President Ronald Reagan.
The case is Thomas More Law Center v. Barack Obama, No. 10-2388 in the U.S. Court of Appeals for the Sixth Circuit.
(Additional reporting by Donna Smith; editing by Mohammad Zargham)