In arguments filed in a federal appeals court in Atlanta, the government said the new law provided a comprehensive solution to the problem by requiring most people to maintain a minimum level of insurance or pay a tax penalty.
More than two dozen states have challenged the health care overhaul, arguing it exceeds the federal government's powers.
The states argue that the correct way to ensure that people pay for medical services is by imposing restrictions or penalties on those who attempt to use health care services without insurance.
The U.S. Justice Department's filing said the states' proposed solution would require that individuals obtain insurance or "risk being left on the street after a car accident."
"The penalty for failing to maintain minimum coverage — denial of treatment — would be far more draconian than the tax penalty that Congress enacted," the federal government argued.
Under the new law, Congress expanded coverage of the Medicaid program — in which money is disbursed to the states — and the government will bear the lion's share of the costs for doing so.
The states say that they cannot realistically be expected to turn down the federal funds and that the program expansion is therefore impermissibly coercive.
"No court has ever invalidated a condition on federal spending on a 'coercion' theory and several courts of appeals have rejected similar challenges to previous amendments to the Medicaid program," the federal government said in its 62-page court filing.