CBO report on Trumpcare confirms it—You can't fix stupid

This screaming headline "24 million Americans will lose their health coverage" is topping almost every story on the Republican Obamacare replacement plan now that it's been studied by the Congressional Budget Office. But I have a better headline: "Government can't fix stupid."

That's the real takeaway because as it turns out, most of those 24 million people projected to "lose" coverage will be doing so of their own free will. Here are the CBO's own words:

Most of that increase, (in uncovered Americans), would stem from repealing the penalties associated with the individual mandate. Some of those people would choose not to have insurance because they chose to be covered by insurance under current law only to avoid paying the penalties, and some people would forgo insurance in response to higher premiums.

In other words, now that the government can't make them do it, a lot of people who can afford to buy health insurance simply won't do it anymore. And therein lies the problem. The role of government is to operate under the consent of the governed, not to act as the nanny state.

So where do we go from here? The first thing would be to do something the Republicans have promised to do for eight years and reintroduce the lower cost, bare-boned major medical insurance plans to the market that the Affordable Care Act outlawed.

It's not clear how many millions of Americans would be willing to pay for those kinds of plans, but they're certainly better than the no coverage choice so many of them will make otherwise.

The big insurance companies don't like those plans because they allow a lot more companies into the industry to compete with their more comprehensive coverage. But neither the Republicans nor the Obama administration should have backed bills that mostly help the insurance companies.

Nicholas Kamm | AFP | Getty Images

President Donald Trump attends a meeting about healthcare in the Roosevelt Room at the White House in Washington, DC, on March 13, 2017.

Bringing back major medical plans and eliminating the essential benefits requirements that make all insurance plans more expensive is a simple initial step.

The second step is for the Republicans to fulfill another one of their longstanding promises and truly repeal Obamacare in total. That's the only way for the government to simultaneously get out of the nanny state business and the crony capitalist practice of helping the insurance companies boost their customer base and stifle competition.

Yes, that will leave a lot of Americans without insurance coverage, but now we know that most of that will be by choice. At least under a repeal, those more responsible Americans who do want to pay for good coverage won't be on the hook financially for those who don't. Liberty is messy and unequal in that way, but so be it.

For those who will lose insurance because of the GOP's plan to reduce Medicaid payments to states, newly confirmed Medicare/Medicaid chief Seema Verma's plan to cover those people by requiring them to make small contributions per month.

The odd man out of all of this messy liberty is the hospital industry. There are crony capitalist aspects to Obamacare and the GOP plan that benefit the hospitals unduly. But the bottom line is that large numbers of uninsured Americans who don't pay for care put an unfair burden on hospitals who cannot legally turn patients away.

That leaves them with a lot of unpaid bills and liabilities. The problem is that the ACA and the Republican bill disrupt the entire health care system to address this problem. Requiring everyone to buy insurance, setting up a massive subsidy system to make that possible, and forcing the states to eventually take on the cost of a major expansion of Medicaid were all steps meant to address the hospitals' issues. But it has created far too many new problems.

According to the American Hospital Association, the actual price tag for the total unpaid hospital bills in the U.S. was about $40 billion in the last years before Obamacare. That's not chump change, but compared to the actual and political cost of the ACA and the GOP's replacement plan, it would be a lot cheaper to come up with another way to address that problem directly.

That may seem like too much government aid to one industry, but if the government is going to require hospitals to treat everyone who walks in the door who needs treatment, there is some justification for an assist in this case.

Here's the bottom line: The CBO report proves that government is not efficient or successful at getting people to switch to healthier or more prudent behaviors without overstepping its legal authority. That's because it's not Uncle Sam's job in the first place. And you can't fix stupid.

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

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