Under ObamaCare, the promise ran, if you have coverage you like, you’ll be able to keep it. That turned out, of course, to be untrue. Now everyone from businesses to unions is scrambling to find a survival strategy before the law’s implementation come January.
That scramble, at least, is forcing some of the law’s most ardent backers to acknowledge its unintended consequences. In New York, for instance, the nonprofit Freelancers Union says the new federal law’s onerous regulations and taxes will burden its innovative health-insurance model for the self-employed with enormous added costs.
Riding to the rescue is Assembly Speaker Sheldon Silver, who has joined with Sen. Kemp Hannon (R-Garden City), the chairman of the state Senate’s Health Committee, to co-sponsor a bill to let Freelancers self-insure (like a large corporation or labor union), exempting it from the ObamaCare regime.
This demonstrates just how devastating ObamaCare’s expensive burdens are for the thousands of small businesses and sole proprietors that don’t have the same sympathetic friends in Albany.
Indeed, Freelancers has already gotten help from New York lawmakers in escaping the state’s own regulations.
Before ObamaCare came along, few states burdened health insurance more than New York. In the early 1990s, the state implemented insurance “reforms” that sharply drove up the cost of coverage — at which point the individual-insurance market collapsed. Healthy individuals chose to remain uninsured rather than pay thousands of dollars every month for coverage they probably didn’t need.
That’s where the Brooklyn-based Freelancers Union comes in. Founded by labor attorney and union organizer Sara Horowitz in 1995, Freelancers essentially functions as an association for uninsured sole proprietors. It’s an ingenious model, for which Horowitz has been appropriately recognizedby groups ranging from the MacArthur Foundation to the Manhattan Institute, which gave her its Social Entrepreneurship Award in 2003. Like many associations, its main member benefit is health insurance — but Freelancers was still bound by New York’s expensive insurance regulations.
In 2008, with backing from the Rockefeller and Ford foundations, among others, Freelancers created its own health-insurance company in an attempt to offer more affordable plans to its members. Soon thereafter, Silver and his Albany colleagues did it a big favor: They approved a “demonstration project” that effectively classified Freelancers as a “small group” for health-insurance purposes, sheltering the new company from some of New York’s costly insurance regulations.
The “demonstration” is about to expire — and that’s where the latest waiver comes into play.
The bill would extend Freelancers’ small-group status for another year and, in a new wrinkle, allows it to “self-fund” its plan. This would exempt the group from state insurance mandates and from ObamaCare’s mandates on benefits as well as the federal law’s taxes on premiums in all fully-insured plans.
While the bill would undoubtedly help Freelancers, it’s deeply unfair to the other small businesses, sole proprietors and chambers of commerce that will still have to live under ObamaCare’s burdensome regulations.
In a memo urging support for the carveout, Freelancers Union claims ObamaCare will cost its members $38 million a year, translating to per-person premium hikes of $178 a month. It also complains the new federal law will force redesign of “our most popular and innovative plans.”
The political irony is thick enough to cut with a knife: One of New York’s leading Democrats is seeking to spare a successful small-group insurance plan from the devastating impact of President Obama’s “affordable” health law. By extension, of course, that law is just as devastating for the numerous other small-group plans in New York (and across the country) — plans that won’t rate special treatment once ObamaCare takes full effect next year.
You can’t blame Freelancers Union for trying to get the best deal for itself. But thousands of small businesses in New York, and across the country, deserve the same opportunity. Silver and Hannon should expand their bill to cover all associations, allowing them to escape ObamaCare’s most onerous provisions and giving them the freedom to design their own innovative plans, tailored to their employees’ needs.
Paul Howard is senior fellow and director of The Manhattan Institute’s Center for Medical Progress. E.J. McMahon is a senior fellow at the Empire Center in Albany.