The problem with this approach is simple and well-known. The core of the insurance concept is to create a risk pool. By offering a tax subsidy to employers that encourages them to compensate employees in part through health insurance, the tax code encourages employment sites to serve as risk pools. Removing that subsidy destroys the risk pools. The result is a health insurance system that only works for people who don’t have substantial health care needs.
If high-risk pools could solve these problems so simply, you might ask why it’s not already been done. It turns out to be really expensive. $200 billion over ten years to cover about 4 million people.
But the real core of the idea here is “cheap, renewable catastrophic policies.” These policies are not cheap through some feat of magic, they’re cheap because they’re stingy. Which is fine. If your priority is to minimize federal expenditures, then obviously giving everyone very low-quality health care is better than giving high-quality health care. But it’s like saying that your affordable housing policy is to hand out tents so people can sleep in the park.