The decision is a huge swipe at the 2010 health law and sets the stage for a bigger fight in appeals courts. The Supreme Court's reasoning in NFIB-buttressed by other binding precedent and plain text-thus compels the conclusion that the Individual Mandate may no longer be upheld under the Tax Power.
Twenty Republican state attorneys general initially sued the Trump administration to invalidate the entire law in February, citing Chief Justice John Roberts' opinion.
He also noted that all nine Supreme Court justices who weighed in on the law said the individual mandate and the pre-existing conditions coverage protections, guaranteed issue and community ratings provisions could not be severed.
The move now threatens 20 million who rely on its coverage.
"Congress stated many times unequivocally - through enacted text signed by the President - that the Individual Mandate is "essential" to the ACA", O'Connor wrote in the decision, using the initials of the law's formal title, the Affordable Care Act.
California and other states ruled against by the judge will challenge the decision by appealing in the United States Court of Appeals for the Fifth Circuit. President Donald Trump tweeted that Congress should pass a new law.
Judge O'Connor acknowledged that health care is a "politically charged affair - inflaming emotions and testing civility".
"Today's ruling enjoining Obamacare halts an unconstitutional exertion of federal power over the American health care system while our multistate coalition lawsuit works its way through the courts", Paxton said in the statement. They argued the judge should spare the rest of the law, which includes Medicaid expansion, the employer mandate, health exchanges, premium subsidies and federal health-care reimbursement rates for hospitals.
Lawyers for the Department of Justice had suggested that O'Connor should not rule until after the open enrollment period for the 2019 plan year ends on December 15 in order to avoid disrupting the markets.
In Texas alone, there are more than 4.5 million "nonelderly adults" with pre-existing conditions that could make it hard for them to get health insurance if Obamacare went away, statistics show. And in a statement late Friday, the White House ensured the public that the Affordable Care Act would remain in effect as the ruling is being appealed.
California and Democratic officials in 14 states, along with the District of Columbia, won permission to defend ACA in the Fort Worth case when the Trump administration sided with the states seeking to dismantle it. And the ban on excluding pre-existing conditions from coverage meant that insurers can not refuse to pay for treatments because of a policyholder's medical background.