Obama ally got $340 million to set up health care groups [Examiner, The (Wash., DC)]


February 23, 2013

By Richard Pollock; Richard Pollock, Examiner Watchdog Writer


A health insurance company headed by an old friend from
President Obama's days as a community organizer got a $340 million federal loan to establish Obamacare co-ops in New York, New Jersey and Oregon despite having a chronic record of consumer and regulatory complaints.The New York-based Freelancers Insurance Company has been rated the "worst" insurer for two straight years by state regulators, and data compiled by a national insurance association show an extremely high rate of consumer complaints.

The firm was founded in 2008 by Sara Horowitz, who worked with Obama before his career in elective politics to launch Demos, a left- wing, New York think tank funded in part by George Soros. Before May 13, 2011, the Demos website described Horowitz and Obama as members of the founding group in 1999 that became "the core of Demos' staff and Board of Trustees."Sometime between that date and Nov. 6, 2011, the Obama reference was deleted, according to cached versions of the site stored by the Internet Archive's Wayback Machine.

Before incorporating FIC, Horowitz had established the Freelancers Union, a nonprofit organization that describes itself as offering "health insurance and other benefits, plus advocacy, solidarity, and resources for freelancers and independent workers."

In 2012, Horowitz's FIC won the largest single award under an obscure Obamacare provision that allocates $2 billion to establish 24 co-ops to compete against private insurers and state health insurance exchanges. Co-ops are collectively owned organizations that produce goods or services for the benefit of members instead of for profit.

The funds are awarded as tax-free loans by the U.S. Department of Health and Human Services' Center for Consumer Insurance Information and Oversight.

The House Oversight and Government Reform Committee recently opened an inquiry into FIC's eligibility for the loans.

In 2011, the New York State Insurance Department ranked FIC last among commercial insurers with the most complaints and 49th of 50 among all the state's insurance providers, including health maintenance organizations.

In 2012, the Empire State insurance regulator again ranked Freelancers "worst" in complaints and 51st among 54 rated New York- based insurers.

The department ruled that "the health insurer did not comply with statutory or contractual obligations" in half the cases filed against Horowitz's company by consumers.

The National Association of Insurance Commissioners, which represents 50 state insurance commissioners, reported FIC's complaint rate to be more than seven times the national average in the two most recent years for which data is available.


Sally McCarty, a former CCIIO director of rate regulation and former Indianainsurance commissioner, called the NAIC numbers a "red flag" for consumers."To the degree that it's above one, it shows that it's way out of whack with its share of complaints," McCarty told The Washington Examiner.

Little public information is available on how CCIIO evaluated applicants for the nearly $2 billion in co-op loans it has awarded since 2012 other than its website statement: "CO-OP applicants underwent background checks that included public records searches at the local, state, and national level as well as searches of federal debarment databases."

Thomas P. Miller, a resident fellow at the American Enterprise Institute and an expert on health care law, said, "The question you have to ask, what is the screening criteria, if any, or on what basis are these awards based?"Consumers filed so many complaints against FIC they started a website in 2008 called "Upset Freelancers Union Members." The site is filled with posts by hundreds of angry customers.

New York insurance broker Chris Serrano told The Examiner that he has sold conventional health insurance policies to 60 former Freelancers customers.Horowitz was picked in December to serve a three-year term as a director of the Federal Reserve Bank of New York.

Records kept by the New York State Board of Elections show the Freelancers Union PAC has raised more than $215,000 since 2008.

Neither FIC nor CCIO responded to a reporter's request for comment.
Insurance News - Obama ally got $340 million to set up health care groups [Examiner, The (Wash., DC)]