States joined in suit against healthcare reform

MIAMI (Reuters) - A national business lobbying group on Friday joined 20 U.S. states in a lawsuit challenging President Barack Obama's overhaul of the U.S. healthcare system.

The joint lawsuit led by Florida and now grouping 20 states was filed on March 23 by mostly Republican attorneys general.

It claims the sweeping reform of the $2.5 trillion U.S. healthcare system, pushed through by Democrats in the U.S. Congress after months of bitter partisan wrangling, violates state government rights in the U.S. Constitution and will force massive new spending on hard-pressed state governments.

Florida Attorney General Bill McCollum, who is seeking the Republican nomination to run for Florida governor, told a news conference in Tampa an amended version of the lawsuit was filed on Friday in the U.S. District Court for the Northern District of Florida.

In addition to seven states not named in the original complaint, McCollum said plaintiffs in the lawsuit now included the National Federation of Independent Business.

The NFIB describes itself as the leading association representing small U.S. businesses in America.

Karen Harned, who heads the NFIB's Washington-based small business legal center, told the news conference the healthcare reform law was both unconstitutional and bad for business.

"The federal government has really simply gone too far with this law," she said.

Any healthcare overhaul should have addressed the problem of "outrageously high healthcare insurance costs" in America, but that did not happen, Harned added.

"After all the political deals were made, small businesses were left with a law that does little to address costs and instead is filled with new mandates, taxes and paperwork requirements that increase the cost of doing business," she said.

McCollum said on Friday that the suit was likely to end up in the hands of the Supreme Court, but it may not be until 2013 before the court reaches a final decision in the case.

STATE VS. FEDERAL RIGHTS

Many legal scholars believe the supremacy clause of the Constitution -- which puts the powers of the U.S. government above those of the states -- should prevail. There seems to be no consensus on how the court might rule, however.

McCollum has said repeatedly that, apart from encroaching on state-government rights, the federal government cannot mandate that all citizens buy healthcare coverage or be forced to pay a tax penalty.

"Our scholars all say that that's unconstitutional," he said.

The Justice Department, responsible for defending U.S. law in court, has said it will vigorously fight any challenges to the new healthcare law, which it insists is constitutional. The White House has also said it believes the suits will fail.

Apart from Florida, states joining in the lawsuit include Alabama, Alaska, Arizona, Colorado, Georgia, Idaho, Indiana, Louisiana, Michigan, Mississippi, Nebraska, Nevada, North Dakota, South Carolina, South Dakota, Pennsylvania, Texas, Utah and Washington.

Another state, Virginia, has filed a separate suit, arguing that the new law's requirements that most Americans buy health insurance clash with a state law that exempts Virginians from federal fines to be imposed for not having health insurance.

(Editing by Pascal Fletcher and Eric Walsh)