Horror stories are a staple of those who believe that universalhealth insurance, with strict parameters set up by the federalgovernment, is the answer not only for the tens of millions with nocoverage, but even for those fortunate enough to have a policy, yetwho too often find themselves left up the creek by outrageouscarrier misconduct. Exhibit A is the case of Patsy Bates, whosehealth insurer dumped her during breast cancer treatments, and whopaid the price last month.

(For the full Feb. 25 story, check out the “Good Morning, America”site by clicking here.)

Ms. Bates saw her health coverage cancelled by Health Net oversome technicalities on her application while she was in the middleof breast cancer chemotherapy, dumping her with $129,000 in unpaidmedical bills, and forcing her to at least temporarily postpone herlife-saving treatment.

But Ms. Bates did not fade away quietly. She fought back inarbitration–the only legal avenue open to her under herpolicy–convincing arbitor Sam Cianchetti, a retired Los AngelesCounty Superior Court judge, that the carrier not only broke statelaws, but acted in bad faith as well.

As a result, she was awarded $9 million–with the bulk, $8.4million, for punitive damages.

That might be a relative slap on the wrist for a carrier thatsize, but more important, the decision, resulting bad publicity andthe potential for further suits now that the cat was out of the bagprompted Health Net to end its habit of canceling the policies ofsick policyholders, thereby saving lives and heartache down theroad.

Better yet, the Los Angeles Times reported that other carriersmight be following Health Net's example–the good one, by notbailing out on sick insureds. (Click here to read the Times story.)

Other legal challenges of the carrier's cancellation policy arepending, according to the LA Times–including a potentialclass-action.

Judge Cianchetti called Health Net's actions “egregious,”because, according to GMA, the carrier was not only systematic, butdownright enthusiastic about tossing sick customers overboard,offering bonuses for cancellations, and going so far as to setquotas in case certain staff members didn't have the stomach to actso callously.

Ms. Bates' lawyers argued that Health Net had saved more than$35 million by rescinding policyholders between 2002 and 2006, GMAreported.

The LA Times quoted California Insurance Commissioner StevePoizner as hailing the decision. “Health insurers simply cannothold out the promise of insurance for their consumers, and thensnatch it away just when people need it most. That is illegal,immoral and will not be tolerated,” he said in the article.

Why is it that so many people and politicians want to tellprivate carriers to take a hike, and give government a bigger rolein health insurance?

I don't recall the last time Medicare dumped a cancer patientout on the street. Indeed, even with Medicaid–the insurer of lastresort for the destitute–a dear friend of mine suffering fromAIDS-related complications received the best of care, all paid forby the government program, before he finally succumbed.

So, how did Ms. Bates manage to survive long enough to beat herformer carrier in arbitration? GMA reports that she completed hercancer treatment through a state-funded program in California.

State-funded? Interesting.