It looks as if the recent U.S. Supreme Court oral arguments in King v. Burwell transpired as expected. While all justices must follow the golden rule that a statute cannot be interpreted in isolation but instead must be read in full context, there were differing opinions as to whether Congress wrote the Affordable Care Act knowing that health insurance subsidies are conditional upon state exchange participation, and whether the IRS overstepped its legal bounds by disbursing taxpayer money to insurance companies in 36 federal exchanges without any congressional authorization whatsoever.

As arguments commenced, Justice Stephen Breyer agreed with the federal government’s position that a federal exchange set up by the Department of Health and Human Services stands in the shoes of a state exchange. In the excerpt below, see how Breyer takes the word “such” to mean that an exchange established by a state under section 1311 of the ACA is really just a term of art:

Justice Breyer: As I read the definitions, there’s a section, Definitions, and it says, quote, The term “Exchange” means, quote, an exchange established under 1311. And 1311 says, An Exchange shall be a government agency, et cetera, that is established by a State. Those are the definitions. … So then you look to 1321. And 1321 says, if a State does not set up that Exchange, then the Federal, quote, secretary shall establish and operate such Exchange. So the statute tells the Secretary, set up such Exchange, namely, a 1311 State Exchange.

It’s no surprise that the liberal justices perceive that health insurance subsidies are not limited to the five written words “exchange established by a state.” Without these subsidies, they asked, who would visit the federal fallback exchanges? Without these subsidies, what other benefits would a federal exchange bring to customers? And, without these subsidies, wouldn’t Obamacare fall short of achieving its desired goal of near universal coverage? Surely Congress never would have written such a risky provision.

But Michael Carvin, the plaintiffs’ attorney, was quick to point out that subsidies are not the lone mechanism to sustain a federal exchange. Rather, the individual mandate is a critical ingredient that propels people to purchase federally approved health plans on the marketplaces.

Although it didn’t pack much punch back in 2014, the annual tax penalty for opting out of health insurance subsequently increases. Forbes opinion editor Avik Roy makes another good point on this issue:

There will remain an individual mandate, forcing many people to purchase health coverage regardless of their eligibility for subsidies. It’s true that in a subsidy-free state, average premiums would likely go up, and that fewer people would enroll in Obamacare than originally hoped. But guess what? That has already happened, even with federal exchange subsidies.

Obamacare’s mandates and regulations have already led younger and healthier people to stay away from the exchanges: what wonks call “adverse selection.” Indeed, enrollment in the exchanges has skewed around 25 percent older than one would expect without adverse selection. And underlying premiums have skyrocketed; our Manhattan Institute analysis found that nongroup premiums increased by 49 percent in the average county.”

Roy adds that federal exchanges currently operate within U.S. territories, premiums have risen by as much as 55 percent, and no subsidy flow is happening through those marketplaces.

While King v. Burwell is a case about statutory interpretation, Justice Anthony Kennedy curiously brought up the notion that state exchanges could be considered coercive if the plaintiffs win. In other words, the government’s draconian regulations on insurance companies would push federal exchange marketplaces to the verge of death spirals unless states take on the herculean task themselves.

Kennedy makes an interesting point; however, money isn’t being taken away from states if they opt for federal exchanges. Instead, states are being rewarded with federal funds if they decide to administer their own exchanges.

In response to the issue of risk, Carvin astutely observed that limiting subsidies to state exchanges is by no means the most precarious provision in the law. If anything, Congress was playing a higher-stakes game for state compliance when it passed the original Medicaid expansion. Before the Supreme Court ruled this unconstitutional, the feds effectively were holding states at gunpoint — either expand medical assistance eligibility or lose all federal program dollars.

Look at Medicaid expansion today. North Carolina and 22 other states have exercised the freedom not to expand a program that would divert resources from the program’s most vulnerable patients while devouring other parts of their budgets.

Did Congress intend for that to happen? This scenario runs parallel to the exchange between Justice Antonin Scalia and Solicitor General Donald Verrilli on congressional intent versus rule of law:

General Verrilli: Textually, their reading produces an incoherent statute that doesn’t work. Their reading forces HHS to establish rump exchanges that are doomed to fail … and of course it revokes the promise of affordable care for millions of Americans. That cannot be the statute that Congress intended.

Justice Scalia: Of course it could be. I mean it may not be the statute they intended. The question is whether it’s the statute that they wrote. … Is it not the case that if the only reasonable interpretation of a particular provision produces disastrous consequences in the rest of the statute, it nonetheless means what it says.

If the High Court rules federal exchange subsidies illegal this June, Justice Samuel Alito threw out the idea to stay the mandate until the following tax year.

This would essentially mitigate the disruption in the insurance market and present Congress with an opportunity to amend this unworkable law. In the meantime, North Carolina should revisit how the state’s insurance market operated prior to the law’s passage and pass legislation that allows for more accessible, affordable medical care.

Katherine Restrepo is Health and Human Services Policy Analyst for the John Locke Foundation.