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Thoughts on Self-employed Health Insurance Reform

An Opportunity for State Leadership in the Network Society

[ Iowa DCA's Inquiry ] [ Response: Thoughts on Self-employed Health Insurance Reform ]

Related pages:  [ Sohodojo home ] [ Iowa Dept. of Cultural Affairs home ] [ Imagine Iowa 2010 Initiative ]

Update related pages:  [ BringNewOrleansBack.org ] [ New Orleans Reconsrtuction at Wikipedia ]

New Orleans' cultural creatives have formed the New Orleans Culture Committee and published their vision, A Cultural Dream for New Orleans. We encourage the committee to challenge Mayor Ray Nagin, in turn, to challenge our nation's health insurance providers to make afforable, quality health insurance available to the brave, creative self-employed individuals who still, and to those who in the future will, call New Orleans home.

New Orleans after the Katrina disaster is a vivid example of how place-based communities are the very embodiment of a Shamrock organization. The core/managerial team cannot survive without outsourced business services and the contingency workforce.

Katrina's devastating impact on New Orleans shows us that local citizens are much more than simply taxpayers and human resources to be offered to business. The people who lived and worked in New Orleans were very much a contingency workforce vital to the economic vitality and sustainability of this most exotic and creaitve U.S. city. New Orleans without its people is a wasteland.

Getting folks back will be no easy task. But perhaps this devastating experience will prompt Mayor Ray Nagin – leader of New Orleans' core/managerial team – to offer his city's current and future creative, independent workforce something we don't find elsewhere... affordable high-quality health insurance for the self-employed.

With this difficult life-lesson in mind, we encourage you, our state legislators, and municipal leaders to revisit the following article... Perhaps it won't take a Katrina-scale disaster to spark the idea that affordable health insurance can be a powerful carrot to attract creatve independent workers that are so vital in so many ways to our state, our cities, towns, and rural communities.

--Timlynn Babitsky and Jim Salmons--
Thanksgiving, 2005

Anita Walker, Director of the Iowa Department of Cultural Affairs and the visionary leader of the Imagine Iowa 2010 initiative, is among those interested in Sohodojo's research and social action agenda. In a recent correspondence, she posed the following:

Greetings Jim and Timlynn,

I've read your material and it fits perfectly with our thinking on the cultural worker as entrepreneur. I am most interested in how Iowa can develop a climate that attracts and nurtures these entrepreneurs. One thing that keeps coming to mind and that you note in your presentation is the issue of health insurance. We are located in the nation's second largest insurance center. I'd love to work with these folks right down the street to develop a model of affordable insurance for the individual entrepreneur.

Your thoughts?

Anita, you are hitting the nail on the head with regard to the dilemma of self-employment health insurance.

Some Progress Being Made

Thankfully we are making at least some progress on this important issue with the leveling of the playing field by moving toward full tax deductibility for self-employment insurance premium payments. This progress is not fast enough, but some movement is better than nothing.

Working Today, although its service area is currently limited to New York regional independent workers, is at the forefront of advocacy for portable health care benefits and tax deductibility of health insurance premium payments by the self-employed.

Another front where folks are engaged on this issue is that of portability of benefits; that is the decoupling of insurance from the employer and placing the persistent insurer/insured relationship between the individual/family covered by the policy and the insurer. To some degree, portability is a good thing and will be welcome. However, portability without affordability is of limited use.

Affordability comes from group buying power. In this regard, we see no substantive effort to break the stranglehold of the unlevel playing field that is tilted dramatically in favor of corporate-provided health benefits. Self-insurance and the aggregation of employee groups across state lines gives large employers a significant unfair purchasing advantage. Our membership in the National Federation of Independent Business (NFIB) is not much help here as such groups are restricted in aggregating their members for group policy pricing and they cannot establish a self insurance program.

Shamrock Organizations Provide an Opportunity for State Action

So, what's a state to do to help its cultural/creative class citizens to be a thriving, contributing segment of a state's economy. Well, we are not lawyers and not expert in the details of these matters, but we have a strategy in mind that we'd like to put on the table for your consideration.

In our briefing to a North Carolina state senator that you read, we urged the senator to see the cultural and creative class as an untapped resource for solutions to a state's social and economic problems. And we talked about the Shamrock organization. We showed how the independent or contingency workforce (that segment where you'll find lots of cultural creatives) exists in a world of overlapping Shamrock organizations. We mobile independent workers participate, as needed, in multiple organizations.

In that presentation, we were looking only at the private sector "players" in a state's economic ecosystem. But let's not forget that state government is a major employer and thus a major player in its own economic ecosystem. And just like most modern organizations, state government is increasingly modeled on the Shamrock organization of three inter-dependent 'leaves'; the core professionals, the (mostly small) business services sector, and the contingency workforce.

Current thinking would have it that a state's contingency workforce is composed only of those folks in direct contract service to the state. But what if we took a more sustainable, ecological perspective on the state's Shamrock organization?

Creatively Rethinking the State's Employment Ecosystem

	Creative Class Adds Heat to Local Economies
	The Iowa Department of Cultural Affairs is at the forefront in recognizing the untapped contribution of creative class entrepreneurs to state-level economies. Learn more by reading Richard Florida's book, The Rise of the Creative Class.

Companies considering relocation repeatedly tell us that enthusiastic, skilled workers are a top priority. Too often, a state's response to this perceived need is focused only on skill training programs and workforce reallocation assistance. But, just as the Iowa DCA already knows, it is even more important that the state keep its current and attract new cultural/creatives, the knowledge-worker catalysts of change and growth in today's organizations. As Richard Florida reminds us, the creative class is the source of 'heat' in regional economic development.

It is reasonable, then, to think of the pool of cultural/creative class folks as a vital economic resource of the state and therefore part of the state's own contingency workforce. This state-recognized workforce is made available to the companies and community organizations in need of contract workers. In effect, the state can become a member-assisting service-oriented 'guild' much like today's employment agencies are evolving into guilds.

MIT's Tom Malone and Robert Laubacher are prominent observers and advocates of the new generation of guilds emerging to fill the void where transient relationships between employer and employee have eroded the traditional model of career-based employment. For more on the guild phenomena in the evolution of our employment system, see "Retreat of the Firm and the Rise of Guilds: The Employment Relationship in an Age of Virtual Business" a working paper published as part of the Sloan School of Management's Initiative for Inventing the Organizations of the 21st Century.

A state can make a strong case that its mobile, contingency workforce is a vital segment of its economic ecosystem, an ecosystem that is vital to the health and well-being of all citizens in the state. This state can then insist that its health insurance provider cover this segment of the state's population under the state's own group health insurance plan for its workers. If the state's current health insurance provider doesn't see it this way, shop for a new provider that does.

Accounting for such affordable group health insurance among the state's self-employed could be handled on the state's income tax return. Interim payments could be collected in the same way that income tax and social insurance benefit withholdings are handled.

Iowa's Field of Dreams Can Be a Level One

As mobile cultural/creative class members, what states do you think would make it onto our short list of places to live if participation in a truly affordable and easy-to-pay-for health care plan was included as part of the benefits of state residence? Anita, this alone would not do it. But it sure would be an 'ante-upper' when combined with the vision that forward-thinking states like Iowa have already identified as goals of their support of their emerging cultural/creative entreprenurial constituencies.

Again, we are not lawyers and not subject matter experts on this. We are simply members of the cultural/creative class segment that would be attracted to a state with such forward-thinking programs and policies. We're not looking for hand outs. But we would like to play on a level playing field for a change.

And, Anita, given Iowa's unique status as a hotbed of the insurance industry and your Department of Cultural Affairs vision, we can't think of a state in a better position to explore the potential of state-level 'guilding' of the cultural/creative workforce as means of self-employment health insurance reform.

--Timlynn Babitsky and Jim Salmons--
05 March 2003
Founders and Research Directors
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