The Centers for Medicare & Medicaid Services last month awarded $340 million in low-interest and no-interest federal loans to three organizations sponsored by Freelancers Union, a Pioneer Portfolio grantee, to create three of the first seven Consumer Operated and Oriented Plans (CO-OPs) in New York, New Jersey and Oregon. Created by the Affordable Care Act, CO-OPs are consumer-governed health plans that use profits to lower costs for consumers, improve quality of health care, and increase enrollment or benefits based on members’ needs.
We caught up with Sara Horowitz, the founder and executive director of Freelancers Union, to gain some insight on lessons she’s learned, what it means to be truly innovative, and how to put the “health” back in health insurance. The nonprofit Freelancers Union, with 171,000 members nationwide, advocates on behalf of the 42 million independent workers in the U.S. The organization provides health insurance to over 23,000 New York freelancers and their families through its social-purpose Freelancers Insurance Company.
What gave you the idea for Freelancers Union?
I wanted to figure out the next form of unionism, because people had begun working in a completely new way. Thirty percent of the workforce now earns its living as freelancers, contractors and temps.
When I began speaking with freelancers and independent workers in the mid-90s, their biggest concern was health insurance. I came into the field with no health policy background and didn’t carry any baggage. I approached the problem of changing the health care system by trying to help working people get the health insurance they need. Focusing on our members has been my North Star when deciding which strategies could work and which won’t.
When did you decide to start your own insurance company?
What we really wanted was to merge the ideas of Kaiser Permanente with union benefit funds, bringing in the best ideas out there. We recognized that you can do the most if you’re responsible for the money, and that we couldn’t accomplish our goals without creating an insurance company.
What did you learn from talking to your members about what they want from health benefits?
The biggest lesson, which we haven’t solved yet but have made strides toward, is that our members want to get more value in what they’re spending on their health and well-being, and they should. Americans pay out-of-pocket for extra efforts they make for their health, whether that means going to the gym, taking a yoga class, or purchasing healthy foods. Our health benefits should integrate efforts that keep people healthy, not only physically, but mentally, emotionally and socially. In places like northern Italy, you don’t have to be rich to eat well. We need that kind of culture change, and I like to think we can help.
What did you learn from starting your own insurance company?
I learned that you have to know what you’re trying to achieve and understand that there are risks, even if you are unsure what the risks are. You have to build a great team that can help search for what you don’t know. You need a board that has wisdom and experience in all aspects of the field. You have to always strive to do the right thing. In the short-term, you’re making changes that are central to peoples’ lives. Sometimes, this will make them very anxious and even mad at you. You have to reaffirm that there’s no alternative and stay on course to make the situation better. If you continue to communicate and build relationships with your members, their trust and support will come back.
That’s part of what I love about the Pioneer Portfolio and the zeitgeist of social entrepreneurship. When you’re working on complex issues, change and success take time. In current politics, government officials don’t have the longevity to do that right now because we’re not giving them enough space. So, the nonprofit sector has to step in and have the patience to pioneer and experiment.
What spurred you to pursue the CO-OP?
As you can imagine, trying to plan strategically during the past year has been challenging. As we looked at health reform, we thought about the opportunities and challenges for freelancers. We started tracking the CO-OP regulations two years ago because it concerned nonprofit health insurance. When the regulation passed, we applied for funding and began working with Nancy [Barrand, senior adviser for program development for RWJF’s Pioneer Portfolio].
What difference did the Pioneer Portfolio grants make?
Whether or not you support CO-OPs, there was $3.2 billion of support available and Nancy was one of the only philanthropists who even paid attention. That’s another reason I love the Pioneer Portfolio. It has a strong point-of-view about its mission, but is open to different strategies for solving problems.
What makes this strategy a pioneering idea?
Much of the focus today is on individuals, whether they have to get insurance through an individual exchange or a policy carrier. But truly, insurance works best in groups -- always has, always will. It’s important to set up these nonprofits that understand their members, and that can tailor benefits to what people actually need and make dollars go so much further. We are introducing the ideas of affinity, solidarity, and other ideals from the mutual insurance industry that built up cooperatives. I think that mindset makes our work pioneering.
Do you think this is a “disruptive idea”?
Yes. We started with freelancers, a part of the market nobody wanted or had cared about up to that point. Now freelancers and independent workers make up a third of all employees, and the workforce is moving in that direction. So I believe we’ve made an impact on how people traditionally think about the makeup of the workforce, as well as ways to offer health insurance.
It’s important to understand that we are not done yet. We need to move away from the fee-for-service system, go back to medical homes with integrated care, and foster thinner, curated networks. I think it’s important that we start to collect and publicly share data with members, doctors and hospitals to solve problems with health spending. We also need to integrate alternative care structures that support healthy behaviors, such as proper nutrition and exercise. We’ve structured the health system with these as fringe benefits, when they should be mainstream benefits. Freelancers Union is trying to change the culture by offering affordable, stable benefits to independent workers—showing that it can and should be done.
For more information on how Freelancers Union is expanding health insurance choices, check out last week's blog post by Nancy Barrand, senior adviser for program development for RWJF’s Pioneer Portfolio.