We have established organizations such as labor unions, community groups and faith-based groups representing people of similar needs throughout the country. There are significant business cooperatives such as Sunkist, Land O’Lakes and Ace Hardware. And then there are entities such as credit unions and large union benefit funds. Why not enable some of these organizations to provide health insurance to their members through a system that includes not just one giant co-op, but a multitude of co-ops, using and building on institutions that already exist?
This idea has already been implemented on a smaller scale, and it works. Freelancers Union has successfully pioneered a model for providing health insurance to our members, including more than 20,000 independent workers in New York, through the launch of Freelancers Insurance Company (FIC), which has no private shareholders. FIC is an effective, practical model that, in embracing both components at the center of the healthcare debate, leaves room for political compromise.
This is how I envision our model to play out on a national level, across varying demographic groups: The government needs to serve as the watchdog, establishing rules. The first rule would be that all entities providing insurance would have to be nonprofit and have no private shareholders. Because they would be nonprofits, the government would also need to establish rules governing any investment capital involving investors and what return they could receive. This would ensure that members of these co-ops should pay for what it costs to run the plan and not pay to enrich investors. All of the nonprofits would have to maintain a business model that was self-sustaining. Additionally, no co-op would be allowed to exclude people with pre-existing conditions.
Here’s the crucial point: the existence of co-ops does not preclude the existence of a government-run public option. There’s no reason we can’t have a system that includes the same private insurers there are now, as well as a number of nonprofits offering insurance along a co-op model and government-run plans competing with all of them.
To begin such a program, the government would issue nationwide requests-for-proposal to serve two key functions. One: Existing entities, such as nonprofits or credit unions, would have to demonstrate they have some kind of affinity group. For instance, community groups and faith-based groups could organize to group large populations together to market plans. Two: New types of insurance companies could be encouraged to form as social enterprises to meet the needs of particular communities. These smaller nonprofits could then group together to form larger risk pools, purchase re-insurance and even co-market their products.
Much of our country’s history is built around successful, long-thriving associations. Instead of the government organizing large insurance co-ops, leveraging the foundation, resources and knowledge of our country’s leading social innovators would simplify the development process. After all, they know their members. For example, mine workers need tailored health plans that their union understands best. Community groups organizing in distinct communities know particular diseases tied to specific populations.
FIC’s offerings are tailor fit to the needs of Freelancers Union’s members. Because it is owned by Freelancers Union, as our members’ healthcare needs progress and change over time, so will our benefits offerings. This is a model focused on cost containment and customization. Other groups could also look at containing cost by analyzing how different doctors, hospitals and other providers charge compared with health outcomes and improved health.
Because these are voluntary benefits they are completely portable and don’t leave room for much competition.
Other countries, such as France, Germany, Canada, England, Spain and Italy, employ similar models where a basic public plan is supplemented by private plans. It is time for our country to reform the healthcare system in a way that doesn’t alienate a specific class of people and that can grow organically out of our existing infrastructure to be sustainable well into the future.
Horowitz is founder and executive director of Freelancers Union.