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This will be the 'buzzword' in Trump's Obamacare replacement

Dr. Esteban Lovato performs a routine check-up on a patient at the La Loma Medical Center in Oakland, California.
David Paul Morris | Bloomberg | Getty Images
Dr. Esteban Lovato performs a routine check-up on a patient at the La Loma Medical Center in Oakland, California.

In the national health insurance debate, repeal is the word on everyone's lips, as in "the repeal of Obamacare." But soon enough, "risk pools" will be the new buzzword. And there are some very potent reasons why.

For all of the GOP's and Donald Trump's bashing of Obamacare, there are two provisions of the ACA that would be political suicide to abolish: Guaranteed coverage for people with pre-existing conditions and allowing adult children to stay on their parents' plans until they reach age 26. Luckily, requiring health insurers to keep covering those "children" until they're 26 won't meet much resistance from any quarter. It's the millions of Americans with pre-existing conditions that present the biggest challenge and the biggest costs.

The sickest 10 percent of the U.S. population accounts for a whopping 66 percent of our total health care spending. That was true before Obamacare, and it's still true now. But as Democrats, Republicans, and anyone who understands politics knows, cutting off or even cutting back on benefits to that 10 percent would immediately result in a national outcry. That's why top Trump adviser Kellyanne Conway promised viewers on CNBC earlier this week that "no one will lose health coverage" after Obamacare is repealed.

But here's the problem: While Obamacare has barred health insurers from denying coverage to anyone with a pre-existing condition, that still rising cost of covering them has become the biggest threat to the entire ACA. Not enough younger and healthier Americans have signed up for mandatory health coverage in the far-fetched scheme that promised the insurers there would be enough of them to cover these new costs.

Why anyone expected the healthiest, least responsible and previously uninsured Americans to suddenly sign up for expensive health plans in the first place is a mystery, but the results are the same whether the insurance industry and politicians expected them or not. The cost of caring for the sickest Americans is far from under control.

The Republicans' latest plan to deal with all that is risk pools. The idea is not new; dozens of states used them before they were rendered moot by the ACA. The idea was simple; each state allowed people who could not get private insurance coverage due to their health issues to enter a special state-backed plan. Republicans started talking seriously this past summer about providing federal aid to individual states setting up risk pools as a key part of House Speaker Paul Ryan's Obamacare replacement plan. But with almost everyone expecting Trump to lose in November, the plan didn't get much attention.

That doesn't mean no one paid attention. Most reports and even opinion columns on both sides of the aisle noted the serious cost problems that also plagued the old risk pools. Some of the state operations forced members onto long waiting periods for care while still hitting them with high premiums and big deductibles. On first glance, switching people with those costly pre-existing conditions from Obamacare to risk pools seems like rearranging the deck chairs on the Titanic. Either way, covering these Americans is a very costly situation no one seems to know how to control.

But the Republicans and the Trump team will still push hard for risk pools in the coming months, that is if they have the guts to see this through. Because as costly as the risk pools are, they're still a better place to focus whatever health care resources we have going forward. What we have been doing all along with Obamacare is pursuing a misguided and hopeless quest to get every American nominal health insurance. That is not a realistic or even a very virtuous goal. What we should have been doing all along is working hard to provide health care for every American who needs it. And health care and health insurance are two very different things.

Yes, the cost of providing care for people with pre-existing conditions is still going to be super high with some estimates as high as $24 billion per year. But isn't that money going to be better spent than the hundreds of billions of dollars we've put into setting up a bad government website, commercials featuring grown men in children's pajamas, arranging and then dismantling statewide Obamacare exchanges, hiring more IRS workers to collect non-compliance penalties, and all the other administrative costs of Obamacare? Of course. But somehow, thanks to a lot of noise from politicians and the insurance business for decades, too many of us forgot that this is about care and not coverage.

Luckily, not everyone is confused. Former Director of the Congressional Budget Office Douglas Holz-Eakin has made a similar point that we're already spending so much on the ACA on unnecessary things, the best thing we can do is simply redirect the resources to better ends. And as for the cost taxpayers will still have to shoulder to bolster the risk pools, Holz-Eakin and a few other Republicans have known all along that the political price of not covering them will be even higher.

As the repeal of Obamacare becomes more of a reality, look for more Republicans to get religion not only on supporting risk pools, but also on at least tacitly supporting whatever spending may be needed to pay for them. Non-elected conservatives and small government purists will be aghast at trading one expensive spending plan for another, but they don't have to worry about the inevitably horrific videos and soundbites of very sick people complaining about the Obamacare repeal going all over the place.

The good news is that beyond the crass and cynical self-preservation aspect, the risk pools are truly the lesser of two evils. If we're going to spend money we don't quite have on health care, let it be for health care and not some big government bureaucracy dedicated to the decidedly political goal known as "coverage." The risk pool option is the best way for the Republicans to avoid the worst publicity and potentially force the Democrats into the unpopular position of complaining that the GOP and the White House are spending too much on sick people.

Of course, it would be better if both sides weren't just settling for the lesser of two evils and really working to cut the cost of real health care. When he's president, Trump may indeed do that as he has already promised to do something about drug prices. But to really make a difference that counts, he and the GOP Congress must also focus their efforts on curbing monopolistic hospital pricing power, making it easier to become and stay a doctor in America, and so many other repairable factors that make health care costs too high.

Backing risk pools is a decent strategy for now, provided someone is smart enough in the GOP or the incoming White House team to explain why. Among that group, Trump is probably up to the task. But longer term, there is going to be a lot more work to do. And the entire current and incoming cast of characters in Washington aren't exactly giving us much confidence.

Commentary by Jake Novak, CNBC.com senior columnist. Follow him on Twitter @jakejakeny.

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