The individual mandate requiring Americans to buy health insurance falls under Congress’s enumerated powers to “lay and collect taxes” – it’s paid to Treasury by taxpayers; it’s enforced by the IRS—so it’s a “functional” tax.
Unlike commerce, there is less danger of congressional “control over individual behavior” with taxes.
Roberts: “The Affordable Care Act's requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax. Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness.” (710).
"The Medicaid provisions of the Affordable Care Act... require States to expand their Medicaid programs by 2014 to cover all individuals under the age of 65 with incomes below 133 percent of the federal poverty line." Other expansions as well.
Congress can use its spending power to persuade states to accept federal funds and conditions, but not to coerce or compel. States must have a legitimate choice whether to accept federal conditions in exchange for federal funds (716).
Medicaid expansion is coercive by threatening to eliminate states’ total Medicaid funding (including the medicaid funding the states already recieve under their current medicaid programs), which is an independent grant not related to the expansion (717).
Distinguished from Dole: In Dole, the government’s condition was “directly related to one of the main purposes for which highway funds are expended—safe interstate travel,” and it was only “relatively mild encouragement.”
In South Dakota v. Dole, the loss of 5% of federal highway funds at stake constituted less than half of one percent of South Dakota’s budget at the time. By contrast, "a State that opts out of the Affordable Care Act’s expansion in health care coverage thus stands to lose not merely ‘‘a relatively small percentage’’ of its existing Medicaid funding, but all of
it. Medicaid spending accounts for over 20 percent of the average State’s total budget, with federal funds covering 50 to 83 percent of those costs. (718)." Roberts says this is a "gun to the head" of the states.