Freelancing Isn't Free

A groundbreaking nonprofit starts its own health insurance company for freelancers. Is this the new New Deal?

In mid November the New York City based nonprofit Freelancers Union announced that they were cutting out the middleman and starting their own health insurance company, the Freelancers Insurance CompanyMedia coverage has emphasized that some members are unhappy with the new plans.

But they're missing the big picture: a whole new solution to one of the economy's most pressing problems.

Sara Horowitz started the Freelancers Union (where, full disclosure, I once held a fellowship) to prototype a new social safety net for the new independent workforce. They now have 92,000 members in all professions from attorneys to yoga teachers, and provide health coverage at group rates to 19,000 of them in New York; other activities include political advocacy and an online social network. They raised a total of $17 million to start the Freelancers Insurance Co from big foundation donors including the Rockefeller Foundation, the New York State Health Foundation, the Ford Foundation & the Robert Wood Johnson Foundation.

FU didn't handle the transition to ownership perfectly; after making the initial announcement, they raised premiums and cut benefits on their most expensive plan, and they had a shortage of customer service reps. But Horowitz emphasizes in a phone call to me that only 50 people have actually terminated their coverage, while 8000 have reenrolled, on track to exceed the original number by the end of 2008. Of course, this may be because even the disgruntled don't have any better options for health care. Then again, isn't that the point?

The collapse of the Big Three is putting another nail in the coffin of employer-based benefits. Horowitz's vision is a new social safety net of membership-based nonprofits like hers that can provide portable, flexible benefits while aggregating risk—and not incidentally, political power. She says the new administration is watching the FIC's model closely. "This is a first in a 100-year-old strategy of labor. We're trying something new."

What do you think is the best solution for covering freelancers and the rest of the uninsured masses?

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  • Ari Moore

    My partner and I chose to stay on with FU and their new plans, though we had to choose a plan which is far inferior to the one we could afford last year, and which provides pretty sad coverage. It was the best we could do in the time we had to choose a plan, though now that I'm reading Allison's comment here I see there were alternatives we should have explored.

    Our feeling is that the problem is not health insurance and all of its highly dissatisfactory permutations, but health care itself. Why do doctor visits and tests and medications and surgeries and all the rest of it cost so much that insurance is needed to pay for it? Health care should be a human right, not an endless expense we have to pay just to feel that we'll be able to get treatment if we get sick or injured. One should not have to pay to live. Here in Ithaca we have Ithaca Health Alliance and their free clinic to draw on as backup for our horrendous insurance, but others are not so lucky. I feel that this is the direction we need to move in though, to meet our health care needs - mutual aid, people over profit.

    But then, I'm an anti-capitalist and a utopian, so maybe my thoughts on the subject are less than entirely useful in this context. :)

  • Allison Tartagla

    As a Freelancer's Union member who opted out of the FIC plan, I strongly feel that most of the coverage regarding this matter, including the NY Times article, has been far more favorable towards Sara Horowitz and the FIC than is merited.

    While FU may have had good intentions, the fact remains that members were offered significantly inferior coverage at a significantly higher price compared to what they'd previously had through Empire BCBS, and were given precious little time to explore alternatives. Although I was extremely displeased when I read the details of the plan being offered by the newly-formed FIC, I initially expected to join for lack of viable alternatives. It was only because of the NY Times story that I learned of Media Bistro's Oxford plan, which offered superior coverage for the same price as FIC's best plan. From what I gathered in speaking to the administrators who helped me enroll in my current plan, more than a few FU members jumped ship, so I seriously question the assertion that only 50 members ended their coverage. I have several friends who've been long time members of the Freelancer's Union and not one of us was happy about the changes. Some stayed out of desperation or for lack of choices (the Oxford plan had very specific qualifications for joining) while others moved over to Atlantis, which, while having a far less extensive network, at least does not have the FIC's daunting deductibles and co-pays. I expect if you were to dig deeper, you'd find that a significantly higher number of people have discontinued coverage with FIC and I suspect that number will rise as members who didn't have time to find an alternative before Dec. 31 and wanted to avoid a lapse in coverage discover other options. I suppose only time will tell whether or not FIC will ultimately be able to provide service comparable to what I was able to find on my own, but for now, as interesting an idea as FIC is, I could not afford to select a plan that offered me less coverage than what I was able to find elsewhere.

    Furthermore, although plans were in the making for this transition for at least two years, according to some members, FU allowed them to join their 2008 Empire plan as late as November 1, only to inform them two weeks later that the Empire BCBS plan would no longer be available and that it would be replaced by the FIC plan. Although I am not one of those members, I find this bait and switch on the part of FU to be morally reprehensible.

    Certainly innovative ideas are needed to address the insurance needs of the many self-employed, but the way Freelancer's Union presented and handled their new strategy is far from praiseworthy. The transition was extremely stressful for members, and I can only imagine how stressful it must have been for members who have significant health problems (a 20% co-pay on out-patient diagnostic testing with no cap could easily spell disaster for someone with serious health issues). FIC's vision might ultimately prove successful, but right now they need to start by acknowledging the eggregious mistakes that were made in rolling out this new plan and set about regaining their membership's trust.