By Lawrence Hurley
WASHINGTON (Reuters) - The U.S. Supreme Court on Thursday rejected a conservative legal challenge that could have doomed President Barack Obama's healthcare law, upholding nationwide tax subsidies crucial to his signature domestic policy achievement.
Obama strode into the White House Rose Garden after the ruling to declare that the law known as Obamacare is working, helping millions of Americans afford health insurance who otherwise would have none, and that it is "here to stay."
Chief Justice John Roberts, a conservative appointed by Republican President George W. Bush, wrote in the 6-3 ruling that Congress clearly intended for the tax subsidies that help millions of low- and moderate-income people afford private health insurance to be available in all 50 states.
The court decided that the law did not restrict the subsidies to states that establish their own online health insurance exchanges, as the challengers in the case contended.
"Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them," Roberts wrote, adding nationwide availability of the credits is required to "avoid the type of calamitous result that Congress plainly meant to avoid."
Roberts was joined by fellow conservative Justice Anthony Kennedy and the court's four liberal members in a ruling that may ensure Obamacare becomes a lasting element of the nation's social programs.
The ruling means the current system will remain in place, with subsidies available nationwide. If the challengers had won, at least 6.4 million people in at least 34 states would have lost subsidies worth an average of $272 per month.
It marked the second time in three years the high court ruled against a major challenge to the law brought by conservatives. Both rulings were written by Roberts. Unlike the 2012 case, in which the court was split 5-4, Kennedy joined Roberts in the majority this time.
The law was passed by Obama's fellow Democrats in Congress in 2010 over the unified opposition of Republicans, who have fought it since its inception.
Republicans will keep attacking Obamacare in Congress and on the 2016 presidential election campaign trail to energize right-wing voters and raise money, but little chance exists of the law being rolled back before the end of Obama's presidency in January 2017, political analysts said.
Obama said the law has been "woven into the fabric of America."
"After more than 50 votes in Congress to repeal or weaken this law, after a presidential election based in part on preserving or repealing this law, after multiple challenges to this law before the Supreme Court, the Affordable Care Act is here to stay," Obama added.
The question before the justices was whether a four-word phrase in the expansive law saying subsidies are available to those buying insurance on exchanges "established by the state" has been correctly interpreted by the administration to allow subsidies to be available nationwide.
The exchanges are online marketplaces that allow consumers to shop among competing insurance plans.
Roberts wrote that although the conservative challengers' arguments about the plain meaning of the statute were "strong,' the "context and structure of the act compel us to depart from what would otherwise be the most natural reading of the pertinent statutory phrase."
After Chief Justice Roberts announced the decision from the bench, Justice Antonin Scalia read for 11 minutes from his dissenting opinion inside the court's white marble and crimson-draped setting.
Scalia said the statute's words were clear, that Congress wanted to limit the credits to the state exchanges. Scalia recalled the court's 2012 decision upholding the law, again over his dissent.
"We really should start calling the law SCOTUScare," Scalia said. SCOTUS is the acronym for the Supreme Court of the United States.
"This court has no free-floating power to rescue Congress from its drafting mistakes," Scalia added.
Roberts, sitting next to him on the bench, sat stone-faced. He smiled slightly at the SCOTUScare line, but otherwise betrayed no emotion.
Conservative Justices Clarence Thomas and Samuel Alito joined Scalia's dissent.
The Obama administration said 16.4 million previously uninsured people have gained health insurance since the law was enacted. There are currently around 26 million Americans without health insurance, according to government figures.
"This is not about the Affordable Care Act as legislation, or Obamacare as a political football. This is healthcare in America," Obama said.
Congressional Republicans vowed to continue efforts to repeal Obamacare despite appeals from Democrats for them to stop.
The top two congressional Republicans denounced the law on Thursday. Senate Majority Leader Mitch McConnnell said it makes life "miserable" for many people it purports to help. House of Representatives Speaker John Boehner called it "fundamentally broken."
The U.S. hospital industry breathed a collective sigh of relief on Thursday and investors cheered that the growing number of paying customers created by Obamacare would not disappear.
The ruling sparked a broad rally in shares of health insurers with an especially heavy stampede into hospital operators, which were seen as being at particular risk of facing steep losses had the subsidies been struck down.
Shares of hospital chain Tenet Healthcare surged 12.2 percent to rank as the biggest gainer for the day in the S&P 500. Four other hospital operators' shares hit lifetime highs: Community Health Systems, HCA Holdings, Universal Health Services and Lifepoint Health, with gains ranging from 7.6 percent to nearly 13 percent.
Conservatives have called Obamacare a government overreach and "socialized medicine" and launched a series of legal challenges.
The current case started as a long-shot by conservative lawyers opposed to law. Financed by a libertarian Washington group called the Competitive Enterprise Institute, the lawyers recruited four people from Virginia as plaintiffs. The lead plaintiff was a self-employed limousine driver named David King.
The plaintiffs said they were "deeply disappointed" with the ruling. The law "unfairly restricts the health insurance choices of millions of people, and it threatens their jobs as well," they added.
The case is King v. Burwell, U.S. Supreme Court, No. 14-114.
(Additional reporting by Joan Biskupic and Susan Cornwell in Washington and Dan Burns in New York; Editing by Will Dunham)