San Francisco's landmark universal health care program can continue to operate, after an appeals court ruled Tuesday that it does not violate federal law.

The unanimous ruling by a three-judge panel of the 9th U.S. Circuit Court of Appeals overturned a lower court decision that the program, dubbed Healthy San Francisco, had placed an undue financial burden on struggling businesses.

Healthy San Francisco is the first plan in the country to offer universal coverage, and requires companies with at least 20 workers to provide health care or give part of each employee's hourly salary to the city as a fee to help offset the program's estimated $200 million cost. The United States is one of the few western countries without universal health care.

The monthly fee is capped at $180 per worker for businesses with more than 100 employees.

In its ruling, the panel stressed that it was not ruling on the wisdom of the plan, but only the legality of the mandatory employer fees under the federal Employee Retirement Income Security Act, or ERISA.

"We are asked only to decide whether ERISA pre-empts the employer spending requirements. We hold that it does not," Judge William A. Fletcher wrote in the court's opinion.

The San Francisco Board of Supervisors approved the program in 2006. A trade association for the city's restaurants sued, arguing that the fee requirement violated a federal law that gives employers a choice in how to provide health coverage.

Kevin Westlye, executive director of the Golden Gate Restaurant Association, said the group planned to appeal.

"If this stands, many counties and states will pass their own employer expenditure rulings, going against why Congress passed ERISA in the first place," Westlye said.

The U.S. Supreme Court ruled in February that the Healthy San Francisco program could proceed while the appeals court considered its legality.

More than 29,000 people are enrolled, according to the latest city statistics. Previous estimates put the city's uninsured population at about 82,000.