Philip Klein makes an important point about why you shouldn’t buy the federal government’s argument that the individual mandate to purchase health insurance is justified under Congress’s taxing power:
It’s true that Democrats went out of their way to call the fine a “penalty” in the legislation to avoid the more politically toxic term “tax” – and that has figured into these decisions – but there’s a much more important reason why the taxing power argument has been thrown out. The reason is that the fine serves a primarily regulatory function, whereas to be justified under the government’s taxing power its primary purpose must be to raise revenue.
When the individual mandate was first conceived, its designers thought of the mandatory insurance premium revenues as a form of taxation. The trouble with that conception (for the mandate's backers, anyway), though, is that all those premium revenues get counted toward the total cost of the law—revealing just how expensive it really is. That’s what happened with HillaryCare in 1994, and it’s one of the reasons that law died. This time around, as Cato's Michael Cannon has written, the law’s designers worked to ensure that those costs would be hidden. And the administration made the argument that the mandate was legal under the taxing power by saying that the penalty for non-compliance was a form of taxation. But it’s really more like a backdoor form of regulation—intended primarily to control behavior rather than to raise revenue. The distinction matters. As Klein points out later in his post, even Judge Norman Moon, a federal judge in Michigan who ruled in favor of the mandate, didn’t buy the government’s argument that the penalty could be constitutionally justified as a tax.