What insurance-market problem did the Supreme Court say its King v. Burwell ruling avoided?

In the case of King v. Burwell, the Supreme Court ruled that consumers using federal health insurance exchanges are eligible for subsidies, thereby avoiding a market phenomenon known as a death spiral.1

The Court determined that interpreting the Patient Protection and Affordable Care Act to deny subsidies on federal exchanges would destabilize the individual insurance market. Without these subsidies, many relatively healthy individuals would have been unable to afford coverage and would have dropped out of the insurance pool. This reduction in the number of healthy participants would have forced insurance companies to increase premiums to cover the costs of remaining high-risk enrollees, which in turn would have caused more healthy people to leave the market, leading to further premium hikes and the eventual collapse of the insurance system. By upholding the availability of subsidies, the Court ensured the pool of insured persons remained large and diverse enough to maintain market viability.12