Health Insurance for Freelancers

I missed this bit of news because I was away last week, but the Freelancers Union just started a health insurance company in New York. This is a big idea from a group that is trying to build an infrastructure to support entrepreneurs and microbusinesses. (Hat tip to Crain’s New York.)

Freelancers Union is a 12-year-old national non-profit that advocates for independent workers. Since 2001, they’ve offered members the ability to buy private health insurance from third-party providers. (Full disclosure: I was once insured through them.) Now, with philanthropic backing, the group is starting Freelancers Insurance Company to meet the needs of members in New York State, where its members are concentrated.

From founder Sara Horowitz’s announcement:

We’ve shown that it’s possible to create a group with the strength and longevity to be a sustainable “risk pool” for health insurance. Independent work arrangements are here to stay, and the market is finally recognizing that.

The more than 20 million companies with no employees by far make up the largest share of businesses in the US. Because of the employer-based health care system, it’s difficult and expensive for these people to get insurance if they don’t have a spouse whose company can provide it.

As the Crain’s story points out, some members are unhappy with the move because premiums on some plans rising. But I want to highlight the announcement, because any new models for getting entrepreneurs health care are worth noting.

The big picture is that our health care system hasn’t kept pace with our economy. Workers are more mobile, less likely to spend long periods of their career working for one employer, and more likely to work for themselves at least some of the time.

Compare health insurance to retirement planning. For decades the model was that people would work for the same company for most of their careers and retire on a pension from that employer. Most people don’t do that anymore, and IRAs and 401(k)s were developed in part as retirement planning tools for people who would not get employer pensions.

Employer-based health insurance depends on a world where most people work as full-time employees of large companies. That world is changing, and health care needs to change to keep up with it. It looks like the Freelancer’s Insurance Company is a start.

Before it's here, it's on the Bloomberg Terminal.