Here's the 'ugliest thing' about the GOP's Obamacare replacement plan

Republican Congressional leaders unveiled their Obamacare health insurance replacement plan Monday night, and the White House is reportedly all for it. But should the American people go for it? Let's look at the good, the bad, and the ugly in the new plan:

The Good

It may seem like a small thing, but the GOP plan boosts individual health savings accounts by nearly doubling the contribution limits and it gives people more flexibility in how they can spend money in those accounts. This might be the best part of their plan.

Whether it's health care, education, or almost anything else important in a society, that society breaks down unless individuals and families take at least some personal responsibility to procure, promote, and preserve those essentials. Health care is probably the best example of this important truth because it's not only about making sure you have access to and can afford good care. A responsible person will also eat right, exercise, and get regular checkups.

Health savings accounts, which allow people to save money tax free to pay for expected and unexpected health care costs, are an excellent tool to reward and enhance personal responsibility. And they don't only work for the rich or the middle class.

President Trump's nominee to run Medicare and Medicaid, Seema Verma, actually implemented a plan in Indiana that allowed and encouraged poor Medicaid enrollees to set aside as little as a few dollars a month for their own personal health savings accounts.

Hoosiers who did so got some of their medical care for free so their accounts wouldn't be drained by the costs of routine care. The point of all these HSA's is not only economic; they also promote that positive personal responsibility message as opposed to a message of undefined and/or unending entitlement.

Predictably, the big government forces behind Obamacare took a lot of the air out of HSA's and Verma's plan in Indiana was almost killed off by the ACA before a compromise deal was made with the White House. Indiana says this plan, which began in 2008, produced better economic and medical results than traditional Medicaid.

The state's own figures say Hoosiers who participated in the plan made more regular visits to doctors for primary and preventive care. They also logged lower emergency room usage, stayed on their medications at a better rate, and missed fewer medical appointments.

It's important to note that nobody thinks HSA's are a "big picture" answer to all the economic challenges of health care costs. But they do provide an extremely positive tone to fight back against an entitlement culture that encourages abuse, neglect, and out-of-control costs.

When it comes to policy, the inherent message is often just as important as the implemented details. And the message for years has been all about what the government or society owes the people when it comes to health care. We haven't heard much about what the people owe themselves and society. A government that willfully abdicates some of its power in order to promote personally-managed entities like health savings accounts is a government that is actually putting the people first.

The Bad

Repealing Obamacare comes with the potential for a nuclear level political hot potato I call "Obamacare orphans." That's the term to describe any significant number of Americans who will not be able to replicate whatever insurance coverage they gained under the ACA. And if any of them are very poor and sick, they will provide the Democrats with a powerful persuasive weapon that can be pushed in front of the TV news cameras at a moment's notice.

To help avoid this political liability, the Republican plan calls on insurance companies to continue covering and offering coverage to Americans with pre-existing conditions. This, despite the fact that the sickest 10 percent of Americans account for a whopping 66 percent of the nation's health care spending.

Separating this group and putting them into so-called "risk pools" that simply provide them with high level care and not just special insurance would have been the best choice. Instead, despite a bevy of new incentives and funding provided to the insurers by this GOP plan, the insurance industry will continue to wilt under the weight of covering these most costly customers. And compassion for them shouldn't be coming in the form of guaranteed insurance, but in the form of guaranteed high quality care, (more on the difference between the two later).

Getting back to the issue of personal responsibility, the Republican plan sadly continues one of Obamacare's assaults on that by keeping the requirement that "children" up until age 26 must be allowed to remain on their parents' health insurance plans. On its face, it seems like a nice thing to do. The argument goes that lots of Americans in their 20s are unemployed, underemployed, and too saddled by student debt to be able to take on the additional cost of health insurance.

But the answer to this problem is not to make younger 20-somethings yet another protected class. These are people old enough to fight in wars, drink alcohol, and even smoke marijuana legally in a number of states. By coddling them further, we delay the urgency of their need to get a job, get married, and become full-fledged members of the economy.

The good news is that the GOP also has a provision that will likely make health insurance cheaper for those 20-somethings to buy on their own. The plan gets rid of the Obamacare rule which prevents insurers from charging older patients any more than three times what they charge younger ones.

The new proposal changes that ratio to five to one, thus allowing insurers to cut premiums for younger customers. That change should be enough. But as long as the Republican plan still allows "kids" up to age 26 to simply stay on their parents' plans, much fewer of them will do the grown up thing and buy any insurance of their own at any price. So keeping this ACA provision alive effectively undermines the new ratio pricing rules. Let's hope the GOP plan also doesn't include some kind of incentive not to make our beds or do our own laundry.

The Ugly

And of course the ugliest thing about this new plan is just like the Obamacare, Medicare, Medicaid, and every other government-run or aided insurance program, this is another plan that's all about coverage and not about actual care. Health insurance never made anyone better or saved a life. It never will. Only health care and health care professionals can do that.

Yes, there are costs connected with that health care and insurance can help people pay for them. But the only thing that can help reduce costs and improve access at the same time for all people is increasing the supply of health care and health care professionals. And this bill, like the ACA before it, does absolutely nothing to address that.

On the demand side, even if some of the people covered by Obamacare lose their insurance under this plan, we'll still have millions more Americans "covered" by health insurance compared to a decade ago.

In other words, demand for health care is way up and nothing coming out of Washington from either party or the White House is addressing the need for more supply. Meanwhile hospitals are consolidating, private practices are closing down or being bought by the hospitals, and the doctor and nursing shortage in non-urban areas is real and serious. With this supply issue not addressed, all this plan or Obamacare can ever do in the long run is increase prices and reduce access.

But for the next several months, and probably years, all we'll be hearing about is insurance. And that's a prognosis that will make us all sick.

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

For more insight from CNBC contributors, follow @CNBCopinion on Twitter.

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