President Barack Obama's signature healthcare law suffered a setback when a US appeals court ruled that it was unconstitutional to require all Americans to buy insurance or face a penalty.
The US Appeals Court for the 11th Circuit, based in Atlanta, ruled 2 to 1 that Congress exceeded its authority by requiring Americans to buy coverage, but it unanimously reversed a lower court decision that threw out the entire law.
The legality of the individual mandate, a cornerstone of the healthcare law, is widely expected to be decided by the US Supreme Court.
Opponents have argued that without the mandate, which goes into effect in 2014, the entire law falls.
The law, adopted by Congress in 2010 after a bruising battle, is expected to be a major political issue in the 2012 elections as Mr Obama seeks another term.
All the major Republican presidential candidates have opposed it.
Mr Obama has championed the individual mandate as a major accomplishment of his presidency and as a way to try to slow the soaring costs of healthcare while expanding coverage to the more than 30 million Americans without it.
The White House voiced confidence the law would be upheld. 'We strongly disagree with this decision and we are confident it will not stand,' Obama aide Stephanie Cutter said in a statement.
Because it conflicts with another appeals court ruling that upheld the law, the Supreme Court is expected to take it up during its term that begins in October with a ruling possible just months before the November 2012 presidential election.
Legal experts have said it was impossible to predict how the high court will rule but agreed that it may be a close vote by nine ideologically divided justices, with moderate conservative Justice Anthony Kennedy as the possible swing vote.
US president meets top US business chiefs
Separately, President Obama met with top US business executives to discuss the turmoil in the financial markets and economic troubles around the world.
The business leaders included chief executives from Johnson & Johnson, Wells Fargo & Co, US Bancorp, Xerox Corp, BlackRock Inc and Silver Bridge.
Mr Obama held the latest in a series of talks with big business against the backdrop of a euro zone debt crisis that has hit financial markets worldwide, adding to investor anxiety in the aftermath of last week's US credit downgrade.
White House spokesman Josh Earnest denied the meeting was called in reaction to market and global concerns but said: 'They'll certainly talk about these issues, about the market reaction here.'
US stocks rose today as mildly upbeat retail sales data offset a closely watched barometer showing US consumer sentiment at its lowest point in more than three decades.
European stock markets also gained despite continued concern about French banks' exposure to European debt woes.
Critics have complained that President Obama has failed to reassure Americans as markets see-sawed this week, in one of the most dramatic periods in the stock market since he took office amid the financial crisis in January 2009.
He said yesterday that Europe's debt troubles were among the global challenges weighing on the struggling US recovery, but the White House said the administration remained confident in European leaders' ability to handle the situation.
Mr Obama's hopes for re-election in 2012 will likely hinge on his success in lowering unemployment, currently pinned above 9%, boosting sluggish growth and restoring confidence lost from the Standard & Poor's downgrade and fractious debt talks.