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 Company. Media 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?