Freelancers Union to End Its Health Insurance Plans in New York

The Freelancers Union, which provides health insurance to 25,000 of its members in New York State, is ending an experiment in providing low-cost insurance to independent workers, saying the new landscape created by the federal Affordable Care Act makes it impossible to do so.

The union's decision came after the state gave the Freelancers Insurance Company, which the union created in 2008, a one-year exemption from the act's provisions so that it would have time to adjust.

But officials of the union said on Tuesday that to stay in business as an insurance provider, it would have to raise premiums by 14 percent across the board, a direct conflict with its reason for going into the insurance business in the first place. In 2014, monthly premiums for the plan, which was only offered in New York, averaged $502.

If they do nothing, the freelancers who belonged to the union plans will be automatically enrolled in one of an array of Empire BlueCross BlueShield plans with benefits that the union says mirror what it has, an assertion some members dispute. Members can also choose to buy insurance on their own. The current plan will expire at the end of the year. Some freelancers, who were notified of the change by email on Tuesday, said they were distressed to find that the Empire plans were different from their old ones in some critical ways.

Unlike some of the old plans, the new plans do not allow members to go outside a fixed network of doctors. The new network will have about 20 percent fewer doctors than the old network.

'I got the email today. I looked at it and said 'Oy,' ' said Josh Baran, a public relations consultant in Manhattan. Mr. Baran said his current freelancers' plan allows him to go to any specialist in the network without a referral and with a $50 co-payment. Under the Empire plan recommended for him, he said, he would have a slightly lower premium but would need to referrals. Also, he said, the network has higher co-payments and fewer doctors.

'If they want to be good friends, they should tell everybody to do everything now,' Mr. Baran said. 'If you need to go to a specialist, go right now. I just made three appointments.'

Sara Horowitz, the executive director of the Freelancers Union, said the union had forged what she called a partnership with Empire because the freelancers already used Empire doctors, and because the union did not want to just tell its members, 'Your insurance is over, bye-bye.'

She said that after analyzing the numbers, the union realized that it would be a challenge to offer insurance at levels required by the Affordable Care Act. Also, many members are middle-aged and have serious, costly health problems, like breast cancer and H.I.V. Empire, with many more members, is better able to spread the risk, Ms. Horowitz said.

Ms. Horowitz said the union would continue to handle insurance enrollment and billing for its members.

'It was a business decision,' said Leslie Moran, a spokeswoman for the New York Health Plan Association, an insurance trade group. 'It does underscore the realities of the Affordable Care Act in terms of some of the costs that are imposed on companies trying to provide benefits to consumers.'

Matt Anderson, a spokesman for the state's Department of Financial Services, which regulates insurance, said freelancers could find affordable options through the state exchange.

The Empire plans being recommended by the union are not on the state exchange, which offers subsidies to people whose incomes are low enough to qualify. The Freelancers Union insurance plan has lost about 1,500 members since last year, most likely because they qualified for subsidies, the union said.

Mr. Baran said he did not see why he should stay with the Empire plans recommended by the Freelancers Union rather than shop for a new plan on his own.

Mr. Baran noted that Empire had a chaotic start on the state health exchange, with the state forcing it to give cash rebates to thousands of customers who had problems using their coverage.

An Empire spokeswoman declined to comment Tuesday on the new arrangement with the Freelancers Union.

The withdrawal from the insurance business is a substantial retreat for the Freelancers Union, whose founder, Ms. Horowitz, won a MacArthur Fellowship 'genius' grant in 1999 for her work on behalf of independent workers. The union is not a traditional union in the sense of negotiating contracts for its members, but it has been a potent lobbying force. It has nearly 250,000 members nationally.