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Union for Independent Contractors to Offer Health Insurance

The Freelancers Union, a nonprofit created to represent freelance workers and independent contractors, will receive $341 million in loans from the U.S. government to start health insurance plans in three states.

The plans will compete with for-profit offerings from companies including UnitedHealth Group Inc. (UNH) and WellPoint Inc. (WLP) and nonprofit Blue Cross plans beginning in 2014, Marilyn Tavenner, the acting administrator of the Centers for Medicare and Medicaid Services, said in a statement. The programs are called “co-op” plans, after a provision of the 2010 health law that authorized them.

The co-ops “will promote competition in the insurance market and respond well to the health-care needs of Americans,” Tavenner said in the statement. The plans will begin by 2014 with the opening of new government-run health insurance markets, called exchanges.

Freelancers Union now offers a 401(k) plan and health- and life-insurance coverage for its estimated 171,000 members, according to its website. The organization’s new plans, which will be offered by affiliates created in New York, New Jersey and Oregon, “will be open to everyone,” the group said in a statement, including non-members.

The union expects to cover 200,000 people in the plans within five years. “It’s like venture capital for health care,” said Sara Horowitz, the group’s executive director.

Freelancers Union is among seven co-op plans that the Department of Health and Human Services is funding. The others will operate in Iowa, Nebraska, Montana, New Mexico and Wisconsin. The plans will share a total of $639 million in government loans, offered at interest rates of less than one percent.

The money will be provided “on an incremental basis” as the organizations reach “milestones” for establishing their insurance plans, to protect against default, said Barbara Smith, the associate direct of the co-op program at HHS.

Her agency has established “sort of an early warning system to determine if a co-op is going to be in trouble and to see if we can get them on a pathway toward correcting that and becoming viable,” she said in a conference call with reporters.

To contact the reporter on this story: Alex Wayne in Washington at awayne3@bloomberg.net

To contact the editor responsible for this story: Adriel Bettelheim at abettelheim@bloomberg.net

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