There's a simple answer on how to deal with people with pre-existing conditions — create an insurance market just for them, Independent Institute senior fellow John Goodman told CNBC on Thursday.
Concern over coverage for those with pre-existing conditions grew after a provision was inserted into the Republican health-care bill that would, under certain conditions, undo Obamacare's ban on letting insurers charge people with those conditions more for their insurance plans than healthy people.
The legislation passed the House on Thursday afternoon and now heads over to the Senate for consideration.
According to the Kaiser Family Foundation, about 27 percent of adults under the age of 65 have health conditions that would likely leave them uninsurable if they applied for individual market coverage before Obamacare. In Colorado and Minnesota, that number is 22 percent, but in Southern states such as Alabama and Kentucky, the number climbs to 33 percent. In West Virginia, 36 percent of the non-elderly population would have declinable conditions.
However, Goodman called those figures "nonsense."
"Before there was Obamacare, in the individual market, insurers could refuse to cover people who were uninsurable. Less than 1 percent of the United States is estimated to be uninsurable. So the Kaiser numbers are just way wrong," he said in an interview with "Power Lunch."
"What is the right way to handle all this? [T]he right way to handle it is to create a market for sick people."
That means, for example, cancer centers would try to attract cancer patients and heart centers would try to attract heart patients, explained Goodman, author of "Priceless: Curing the Healthcare Crisis."
However, he has no problem with government subsidies for the group. His problem is with the current state of the health-care system, even with the GOP's answer to repealing the Affordable Care Act.
"Every health plan in the exchange has a perverse incentive to attract the healthy and avoid the sick. So we have a real race to the bottom that's going to continue even with the Republican bill," said Goodman.
Watch: Ryan says there's more work to ahead