A New Option for Uninsured Self-Employed Workers
If you're one of the growing number of people who work for yourself or can't get health insurance through your job, now you've got another option. The Freelancers Union, a New York-based organization for self-employed workers, contractors, part-timers, and others who don't have an employer providing them with benefits, rolled out health insurance policies in 30 states this week. But there's a catch: These plans don't offer the same protections or benefits as the group plans many workers get through their employers. You may be turned down by the insurer for medical reasons, and even if you're approved your coverage may be more limited than you'd get elsewhere.
While acknowledging potential limitations, Freelancers Union founder and Executive Director Sara Horowitz says this is a start toward providing the 13.4 million self-employed workers—26 percent of whom were uninsured in 2005—the coverage they need. "Our strategy is to start with what we can do, and then start figuring out ways to improve things," she says. Horowitz, a former labor organizer, founded an organization called Working Today in 1995 as a way to represent the growing number of independent workers. In 2003, that morphed into the Freelancers Union, which now claims 50,000 members and provides health insurance to 15,000 in the New York tri-state area. The union also offers other benefits like long-term-disability and life insurance.
To move its program nationwide, Freelancers Union partnered with Golden Rule, an affiliate of health insurance giant United Healthcare, to offer seven different plans. These run the gamut from traditional 80/20 coinsurance policies to newfangled high-deductible plans with health savings accounts, with a range of premium and deductible options. The union hopes it will eventually get enough people on board so that it can form larger risk pools that can use their numbers to negotiate coverage and rates. But for now, individuals must apply on their own (www.freelancersunion.org) and go through a medical underwriting process that involves answering a questionnaire about their medical history and conditions. "It may be that someone will be denied based on health," says Ellen Laden, director of public relations for Golden Rule. Or instead of denying people outright, the insurer may refuse to cover anything related to a pre-existing condition, either forever or for a specified period of time. The premium may be higher as a result as well.
Coverage may be skimpier than in most employer-based plans, too. State rules vary, but Golden Rule policies typically don't cover expenses related to pregnancy or routine newborn care, for example, and limit coverage of mental disorders to a $3,000 lifetime maximum. Routine or preventive care like mammograms and checkups are generally not covered either.
Costs will vary widely depending on age, health, and where a person lives, as well as the type of policy you choose. A 35-year-old woman in average health who lives in St. Louis, for example, might expect to pay $131.55 a month for a "copay select" plan, which provides 80 percent reimbursement after a $2,500 deductible.
"It's almost impossible for loosely affiliated associations [like the Freelancers Union] to do anything meaningful in the health insurance area," says Gary Claxton, vice president of the Kaiser Family Foundation. "There's no rate benefit and there's probably not much of an availability benefit." Insurers may assume that members have joined solely to get health insurance and are more likely to need the benefits. In other words, they're not great insurance risks.
In addition to organizations like Freelancers Union, independent workers often find coverage through professional trade groups or their local chambers of commerce. Or they may buy it on their own through websites like ehealthinsurance.com, which offers quotes on individual policies from a number of insurers. Of course, the best coverage of all will most likely come from a spouse's group plan, if it's affordable.
Freelance union members may get other benefits, however. Horowitz says the Freelancers Union will act as an ombudsman, trying to ensure fair treatment in health insurance for its members. A worthy goal, and members may need the help, say experts, since the individual market is much less regulated than the employer-group market. "In many states, if you buy an association product [which many Golden Rule policies are], you lose protections from the state, including rate protections and the ability to get help from your state insurance commission if you have a problem," says Mila Kofman, associate research professor at Georgetown University Health Policy Institute.
To Horowitz, however, this venture is about more than offering health insurance; it's about reforming the system to catch the people who currently fall through the cracks. From that perspective, the more people who sign up through the union, the better their understanding of the pitfalls and problems, and the better they can target their efforts for change. "When you get denied a claim, that's one thing, but when people in 20 states get denied, that's something else," she says. "Strength in numbers" has always been a rallying cry for trade unions. Now Horowitz wants to apply that principle to a new kind of union.