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DIY health insurance? Why not?

By Jay MacDonald · Bankrate.com
Friday, February 15, 2013
Posted: 10 am ET

When it comes to do-it-yourself projects, I tend to favor the achievable: replace a sink, hang some wallpaper, maybe stain a vanity. Maybe.

But New York lawyer Sara Horowitz took DIY to a whole new level when she started her own health insurance company five years ago, a triumph she recently shared with Slate.com.

Like roughly a third of new hires today, Horowitz found herself classified as an independent contractor by her employer and thus denied company health insurance.

After exploring her options -- move on, buy her own insurance or play health care roulette -- Horowitz asked herself a most lawyerlike question: What if we freelancers banded together to form our own health insurance company?

Step One involved the formation of the Freelancers Union in 2003. Step Two involved an ultimately futile search for favorable group rates through existing insurance providers. Step Three involved the DIY approach, a daunting task considering Horowitz would need $10 million in reserves to operate as an insurance company in New York.

With a little help from the Robert Wood Johnson Foundation and a whole lot of chutzpah, Horowitz founded the Freelancers Insurance Company in 2008 (cue the theme to "Rocky").

Despite a rough first year, Freelancers Insurance turned a profit by the second and actually froze premiums this year, at a time when the goliaths of the industry are raising theirs. Today, Freelancers Insurance Co. insures roughly 25,000 New Yorkers and has built its reserves to $100 million.

How did she manage to best the best at their own game? Flexibility and belief in the cause were critical. While she formed the Freelancers Union as a nonprofit, she listened to experts and made the insurance arm for-profit for long-term stability.

"I'm the lowest-paid CEO of any insurance company in America," Horowitz told Slate. "We don't have any crazy expenses here, no private shareholders. All the money goes back to R&D, to getting great actuaries who help us become more efficient."

How did she earn the crucial loyalty of her fellow free-rangers? Simply put: she leveled with them, through good times and bad.

For her vision and efforts, Horowitz received a MacArthur Foundation "genius" grant in 1999 and was named to the New York Federal Reserve Bank board of directors last December.

And she's not done fighting for her fellow freelancers just yet. Last fall, the union opened its own medical center in Brooklyn where members receive zero-copay care and free yoga classes. She's also searching for a way to provide unemployment insurance for freelancers caught between contracts.

Considering the work involved, it seems unlikely that DIY insurance companies will be springing up from coast to coast, especially with the arrival of much-needed innovations in health insurance under health care reform.

But it's reassuring to know that it's possible.

Follow me on Twitter: @omnisaurus

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3 Comments
Pollob hasan
February 28, 2013 at 2:49 pm

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