WASHINGTON - A sharply divided US Supreme Court on Thursday upheld the centrepiece of President Barack Obama's signature healthcare overhaul law that requires that most Americans get insurance by 2014 or pay a financial penalty.

"The Affordable Care Act's requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterised as a tax," Chief Justice John Roberts wrote for the court's majority in the opinion.

"Because the constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness," he concluded.

The vote was 5-4.

In another part of the decision and in a blow to the White House, a different majority on the court struck down the provision of the law that requires the states to expand dramatically the Medicaid health insurance programme for the poor.

The upholding of the insurance purchase requirement, known as the "individual mandate", was a major election-year victory for Mr Obama, a historic ruling on the law that aimed to extend coverage to more than 30-million uninsured Americans.

The 2010 law constituted the $2,6-trillion US healthcare system's biggest overhaul in nearly 50 years.

Critics of the law had said it meddled too much in the lives of individuals and in the business of the states.

Twenty-six of the 50 US states and a small business trade group challenged the law in court. The Supreme Court in March heard three days of historic arguments over the law's fate.

The court's ruling on the law could figure prominently in the run-up to the November 6 election in which Mr Obama seeks a second four-year term against Republican challenger Mitt Romney, who opposed the law.

SHARES JUMP

Shares of hospital chains jumped after the US Supreme Court made its ruling. Hospital company Community Health Systems was up 8%, while Tenet Healthcare rose almost 5%.

Shares of health insurers were mixed. Large diversified companies such as Aetna and WellPoint were off 4% and 6%, respectively.

But insurers that specialise in Medicaid jumped, with Amerigroup climbing 4,6% and Molina Healthcare up 7,6%.

"The status quo was maintained," said Tim Nelson, an analyst at Nuveen Asset Management. "There was fear that if the mandate went away, hospitals would lose volume. Hospitals should be a major beneficiary of this whole thing, but the uncertainty isn't going away. Now it'll just shift to the election."

Shares of five healthcare companies were temporarily halted, some more than once, after the ruling was announced due to sharp moves.

US House of Representatives Speaker John Boehner on Thursday renewed his vow to try to repeal the healthcare law.

"Today's ruling underscores the urgency of repealing this harmful law in its entirety," Mr Boehner said in a statement just minutes after the court released its ruling.

His Republican-led House is likely to vote to repeal the measure, but Mr Obama's fellow Democrats in the Senate are certain to block it.

REUTERS