BY: CJ Ciaramella – March 1, 2012 5:00 am
The Obama administration has awarded $341 million in loans to the Freelancers Union—a small organization with deep progressive ties whose board members have donated more than $11,000 to Democrats—despite a law suggesting the union should not be eligible for such a loan.
It was recently announced that health care cooperatives launching in eight states will be receiving a total of $638 million in federal loans. The White House hopes the program, created as part of Obama’s health care reforms, will create competitive alternatives to private insurers. Conservatives cite the program as another instance of cronyism.
The largest of these loans went to the Freelancers Union, a New York-based organization that helps independent workers gain access to health benefits, to start health insurance plans in three states.
According to the Freelancers Union, there are 42 million independent workers, of which 171,000—0.4 percent of the total—are members. Of those 171,000, about 93,000, or 54 percent, are based in New York City.
The federal loan is nearly three times the group’s $120 million annual budget.
The board of directors of the Freelancers Union has given at least $11,700 in political donations between 2007 and 2011, all to Democrats.
Questions have been raised as to the legality of the loan to the Freelancers Union.
Membership in the union is free. The organization covers costs through commissions on benefits bought by members. But members of the union own the Freelancers Insurance Company, a for-profit organization—and have since 2008.
The law governing the program forbids organizations that issued health insurance before July 2009 and for-profit organizations from receiving loans.
The two organizations share board members, employees of both determine the organizations’ direction, and the insurance company advertises on the Freelancers Union website.
Officials with the Freelancers Union say it is only a sponsor of the co-ops, and all of the funding will go to the co-ops. Jackie Kessel, a spokeswoman for the organization, told the Washington Free Beacon that the Freelancers Union plans to “facilitate the start-up of the co-ops, and will provide expertise to help get the co-ops off the ground.” The affiliates created by the Freelancers Union will offer insurance to non-members and members.
The Centers for Medicare and Medicaid Services, which is overseeing the co-op program, also defended the Freelancers Union.
“Freelancers Union clearly met the legal standards under the statute and federal regulations,” a Center for Medicare and Medicaid Services spokesman told the Associated Press. “They are not an insurer, they are a nonprofit union of independent workers, sole proprietors, and entrepreneurs who do not receive insurance through an employer.”
The Freelancers Union was founded by Sara Horowitz, an activist with an extensive pedigree in the labor and progressive movement, in 2003. The group has received at least $6 million in grants from liberal-leaning foundations such as the Robert Wood Johnson Foundation, the Rockefeller Foundation, and the Ford Foundation.