Thursday, March 11, 2010

Natoma Canfield

Natoma Canfield has become President Obama's example of why government health coverage is needed. I read the story he tells and it stirs all the expected feeling: sadness, pity, anger. Once I got past the sad story, I started asking myself, well why didn't she have affordable health coverage?

To tell you the truth I was expecting to find no story or a story that pointed at her lack of coverage as being her fault. If her losing her job was no fault of her own, what I found was a similar story used by democrats before.

Person X loses gets sick, loses job, can not get affordable coverage due to pre-existing condition.


I do not think this is cause for changing the whole system, simply a change in laws.

Insurance is a gamble.

-You are hedging your bet by paying a small amount per year just in case you get sick and if you do you don’t have to pay out a large amount.

-The insurance company is betting that you will not get sick and therefore they get to keep all your money. They are able to do this because the odds are in there favor and only get better when they have more people in the pool.

-If you go your whole policy without getting sick the insurance company makes out very well. But if you do get sick, they lost the bet and it is their responsibility to pay. No matter what you got sick from or how long you will be sick.

If Mrs. Canfield was covered when she got sick then the insurance company lost the gamble and should have to pay. If I get into a car accident the day before my car insurance is canceled the insurance still covers everything from that accident.

I think health care insurance should be the same.

While I was doing my research I came upon the blog pasted below and thought it was interesting:

What President Obama Should Say to Mrs. Natoma Canfield [John R. Graham]

This morning, the nation's health insurers assembled for a beating at the hands of Kathleen Sebelius, U.S. Secretary of Health & Social Services. Unannounced, a frustrated President Obama strode in, waving a letter from an American who can no longer afford health insurance.

According to White House Press Secretary Robert Gibbs, Mrs. Natoma Canfield of Medina, Ohio, had just written a letter to the president describing her plight. Fifty years old, Mrs. Canfield was employed when she was diagnosed with cancer 16 years ago. Twelve years ago, she lost her job, took COBRA benefits, and then migrated to an individual policy (likely under Ohio law, which guarantees her access to either and Ohio Basic or Ohio Standard plan, without underwriting). I hope this was a set-up. (If it wasn't, I suspect that Mr. Gibbs and perhaps even the president have violated the privacy provisions of the Health Insurance Portability and Accountability Act, but we'll let the lawyers worry about that.)

Her premiums are going up to about $8,000 annually, which, as a self-employed house-cleaner, she cannot afford.

Unbeknown to the president, this was one of his famous "teaching moments." Note that Mrs. Canfield originally fell ill when she had employer-based benefits. Upon leaving her job, she became subject to the crazy-quilt acronyms that govern the migration of people's health coverage between jobs. The problem with continuation coverage, such as Ohio Basic or Ohio Standard, is that only the sickest people take advantage of them, so naturally premiums go up faster than other premiums. There's no point in the president attacking the health insurers for this fact.

The president's response to Mrs. Canfield should have gone something like this:
"I regret that the tax policies of the United States government make it impossible for health insurers to pool risks properly, like they do for life insurance. Life insurance policies, which are owned by individuals, offer fixed premiums.
If the government stopped discriminating against individual ownership of health insurance, instead of favoring employer ownership, health insurers would be able and motivated to offer insurance policies that guaranteed long-term premium increases no greater than the increase in overall medical costs. Unfortunately, because the median individual health-insurance policy only lasts for three years, people like yourself, who have had individual insurance for over a decade, lose the benefits of long-term risk pooling.
Furthermore, the House and Senate do not propose to solve this problem by removing the discrimination from the tax code. Rather, they substitute massive taxation and subsidies through 'exchanges' instead of effective risk-pooling.
Your letter has motivated me to abandon this approach, and instead reform the tax code so that the American people, not their employers or the government, chose their health insurance."

— John R. Graham is director of Health Care Studies at the Pacific Research Institute.

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