North Carolina’s Obamacare exchange market is in crisis mode. UnitedHealth Group and Aetna have backed out. That leaves 80 percent of North Carolinians who don’t have job-based health insurance with one carrier option in 2017 – Blue Cross and Blue Shield of North Carolina (BCBS NC). The company announced today that it will continue to offer non-group health plans in all of North Carolina’s 100 counties. Cigna will be available to enrollees in five counties. It originally had plans to participate in six counties within the Research Triangle Region, but I’ve been informed that it dropped Durham.

The maps below highlight what North Carolina’s exchange market currently looks like, and what it will look like in 2017:

Because of Aetna’s recent business decision to withdraw from North Carolina’s exchange, the Blues has had to re-file its rate request to account for the high-risk enrollees they could be absorbing. As a result, BCBS NC CEO Brad Wilson says that his company may have to serve an additional 200,000 enrollees. I’ll bet that the influx of members won’t effectively spread the risk across the carrier’s already skewed high-risk pool, since Blue Cross could be overwhelmed with even more medically needy patients who previously accessed insurance through Aetna or UnitedHealth Group. It doesn’t take many of these patients to create a volatile Obamacare exchange. Just 5 percent of BCBS’s customers consumed $1.3 billion in health care during the first year of the law’s exchange rollout in 2015. From that population, the carrier received just $108 million in revenue from collected premiums and funding streams (two of which are temporary) that were built into the law to mitigate initial market instability.

High-risk enrollees aren’t to be blamed for insurance companies’ financial hemorrhaging. Rather, the way in which the exchanges are designed has caused detrimental disruption to the non-group market as a whole. Insurance regulations like community rating and a weak individual mandate provide an incentive for sick people to sign up and healthy people to opt out of health coverage. The Exchanges’ loose enrollment policies have also generated all sorts of unpredictable projections on the actuarial front.

For example, policyholders can pay only 9-months worth of a 12-month product.

Let me repeat that.

Policyholders are allowed to pay their premiums for 9 months and still have an insurance plan for the full year.

This is because Obamacare grants people a three-month grace period before their plan defaults. Therefore, it’s technically legal to use health care services and not pay monthly premiums for three consecutive months until the plan is up for renewal. For the first 30 days within this grace period, the insurance carrier is on the hook. Medical providers are then responsible for any outstanding tabs for the remaining 60 days.

The individual mandate also doesn’t apply to Obamacare’s three-month grace period for not having health insurance. Naturally, people have leveraged this policy to their advantage by purchasing coverage, navigating the medical system as needed, and then dropping coverage for three months at a time. While annual enrollment periods are supposed to prevent this type of behavior, the law’s laundry list of special enrollment qualifiers allows policyholders to game the system. Just Google it.

How should Congress go about Obamacare damage control? Republican alternatives like those put forth by Paul Ryan and the House GOP propose that fixing our health insurance system entails repealing the law’s taxing and spending. It eliminates the individual and employer mandates and instead uses incentives to lure people to sign up for coverage who do not have job-based health insurance. For example, if someone refuses to purchase health insurance during a national open enrollment period, he or she could be faced with higher premium charges for future enrollment.

On the subsidy side of things, the proposal redirects individual market insurance policy subsidies away from insurance companies and instead places them into the hands of consumers, taking the form of a universal refundable tax credit. With this age-based credit, patients are able to use it to purchase health insurance of their choosing. Any amount left over could be deposited in a tax-free health savings account or HSA.

Ryan’s plan also would restore flexibility to states when determining how they enforce community-rating ratios. Right now, under Obamacare, insurance companies can’t price an older policyholder’s premium more than three times the amount of a young person’s policy. As a result, younger policyholders are subsidizing the cost of older policyholders. Increasing the federal standard community-rating ratio to 5:1 or 6:1 would allow actuaries to price health premiums closer to the actual risk each policyholder brings to the insurance pool. This would incentivize the young invincible holdouts to purchase a plan more affordable to their tastes.

The most positive component the plan has to offer is a proposed expansion of health savings accounts. Currently, these tax-preferential accounts can only be used in conjunction with high-deductible health plans, and annual contributions are limited. HSAs are the key ingredient to empowering consumer-driven health care. Since consumers are in charge of their HSA contributions and spending for out of pocket medical expenses, it only incentivizes health care suppliers to be more price transparent – a foreign concept in the health care industry. Ryan’s plan would allow policyholders to maximize their HSA contributions equivalent to their plan’s out-of-pocket limits. It would also allow public health insurance beneficiaries to open up a personal HSA.

While Ryan’s plan comes with some sound policies, there are semantics at play within the “repeal and replace” camp. For instance, most conservative alternatives keep intact Obamacare’s most popular provisions, like subsidized non-group policies (universal refundable tax-credits) and coverage protections for people with pre-existing conditions.

None other than Michael Cannon, director of health policy studies at the libertarian Cato Institute, is sure to point this out. You can read his criticisms (and praises) of conservative alternatives here.

Cannon’s purist Obamacare alternative actually follows through with the GOP campaign to repeal and replace the federal health law. His approach focuses almost entirely on elevating the use of HSAs.

Similar to Ryan’s plan, Cannon advocates for expanding HSA contribution limits. In his view, it would be ideal for HSA contribution limits to triple in size. He advises Congress to tweak the tax code to allow people to pay their monthly health insurance premiums with HSA funds. He wants people to have more self-insuring power by being able to build up an HSA without being required to pair it with an insurance policy, as is the case under the status quo.

What’s most intriguing about Cannon’s plan is that he pushes to preserve the tax-exclusion for employer-sponsored health benefits, but it would be capped based on the defined contribution limits for large HSAs. Employers could then deposit the cash equivalent of the health benefits they offer their workers into a worker’s large HSA. That employee would be presented with more options for how to use portions of his earnings for health care. Not only could he use those tax-free dollars to pay his employer health plan’s premiums and out of pocket expenses, he could also use his HSA reserves to shop for a health plan in the non-group market.

If Congress were to enact large HSAs, health care would be more affordable for more people.   Consumers for once would wield more power over their health care purses, meaning that health insurance companies, medical providers, and other suppliers in the health care industry would have no choice but to chase their preferences and to be price transparent. David Goldhill, author of “Catastrophic Care: Why Everything We Think We Know About Health Care Is Wrong,” extrapolates how consumer-driven health care is, for the most part, a void in the health care sector.

“Almost all of our interactions with the health care system occur through insurers, Medicare, government agencies – the intermediaries I call the Surrogates. On our behalf, they negotiate prices, agree on appropriate procedures and treatments, and oversee results.”

And…

“In every other business, companies chase us…. Not in healthcare…This is why our health care industry does not bother to meet our demands for lower prices, higher quality, less waste, or greater safety. They are too busy serving the quite different interests of their real customers: the Surrogates.”

Overall, large HSAs would reduce asymmetrical information between patients and providers. They are the vehicles to what our health reform should be measured against: reducing health care costs, not solely on reducing the number of uninsured.