Alinsky-tied group awarded $56 million federal loan for health insurance project

Published February 23, 2012

| FoxNews.com

A Saul Alinsky-tied group has been awarded a $56 million federal loan to start up a nonprofit health insurance company -- one of several organizations across the country this week tapped to launch a new network of insurers under the sponsorship of the federal health care overhaul.

The Wisconsin group, Common Ground Healthcare Cooperative, was awarded the funding on Tuesday. According to the Department of Health and Human Services, the group is expected to provide coverage statewide within five years after starting on a smaller scale in early 2014.

But Americans for Limited Government President Bill Wilson questioned the group's credentials -- given its affiliation and lack of experience in the insurance field.

"The indisputable fact is that Common Ground was an outgrowth of the Alinsky operation in Chicago," Wilson said. "We're not giving money to a group with experience in health care issues or in setting up exchanges. ... We're handing the money to people who have been trained by arguably the single most expert individual on community organizing in the last 100 years."

Common Ground, a Milwaukee group that dates back to 2004, is an affiliate of the Alinsky-founded Industrial Areas Foundation.

Alinsky, who died in 1972, is regarded as the godfather of community organizing but has also emerged as a bogeyman of the right. Republican presidential candidate Newt Gingrich has weaved Alinsky's name into his campaign message, repeatedly hammering President Obama as an "Alinsky radical." Like Alinsky, Obama traces his political and activist beginnings to the Chicago world of community organizing.

Alinsky, author of "Rules for Radicals," began as a trained archeologist and criminologist but made his name by working with low-income minority communities for better working and living conditions -- with a distinctly anti-establishment message which called on the masses to seize power from those who held it.

Common Ground, which focuses on social issues in the Milwaukee area, does claim experience in the health care field. The group's top three issues, according to its website, are education, foreclosures and health care.

Common Ground Healthcare Cooperative, an offshoot which technically is independent from Common Ground, is new. According to state records, it incorporated in August 2011, just a few months before the loan applications were due. The group announced its formal launch on Tuesday, along with the $56 million loan decision.

In a statement, the group said it would bring a "new approach to affordable, quality health insurance." The organization said it researched possible health insurance solutions for three years before deciding to apply for the Affordable Care Act funding.

"As a small business owner, I grew tired of the exorbitant increases in health insurance costs with no real additional value. Common Ground Healthcare is a solution to the region's cry for help," board President Bob Connolly said in a statement.

The statement said the organization would start enrolling people in fall 2013 and plans to hire 30 employees over five years.

A representative from the group has not responded to a request for comment from FoxNews.com.

The federal loans announced this week were worth a total of nearly $640 million. Six other organizations in seven states received them. The money is meant for the creation of so-called Consumer Operated and Oriented Plans, which will serve as nonprofit, cooperative-style insurance groups which will offer an alternative to other private plans. The goal is to eventually fund one of these groups in every state and the District of Columbia.

The latest loans will cover start-up costs and cash reserve requirements. Start-up money must be repaid with interest over five years -- the "solvency loans" must be repaid within 15 years. The Centers for Medicare & Medicaid Services stressed in its announcement that the funds can only be tapped "incrementally as milestones are met," and that the program has "extensive provisions to protect against fraud."

CMS said the loans were awarded "on a competitive basis through external and independent expert objective reviews," and following approval by officials with private insurance experience.

But Wilson said some of the other groups awarded appear to have more experience in the field than the Wisconsin organization. He said his group would file a Freedom of Information Act request to the government to find out more about the process.

Wilson described the transaction as a "huge wad of money in a swing state."

Republican Rep. Dave Camp's office also complained that another group, the Freelancers Union, was awarded more than $340 million via federal loans in three states as part of the same program.

In a statement, Camp questioned whether the group was even eligible, describing the loan as a "reward" for "political friends."