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McDonald’s Might (Not) Drop Health Plan

From the Wall Street Journal:

McDonald’s May Drop Health Plan

SEPTEMBER 30, 2010

McDonald’s Corp. has warned federal regulators that it could drop its health insurance plan for nearly 30,000 hourly restaurant workers unless regulators waive a new requirement of the U.S. health overhaul

Trade groups representing restaurants and retailers say low-wage employers might halt their coverage if the government doesn’t loosen a requirement for "mini-med" plans, which offer limited benefits to some 1.4 million Americans.

The requirement concerns the percentage of premiums that must be spent on benefits.

While many restaurants don’t offer health coverage, McDonald’s provides mini-med plans for workers at 10,500 U.S. locations, most of them franchised. A single worker can pay $14 a week for a plan that caps annual benefits at $2,000, or about $32 a week to get coverage up to $10,000 a year.

Last week, a senior McDonald’s official informed the Department of Health and Human Services that the restaurant chain’s insurer won’t meet a 2011 requirement to spend at least 80% to 85% of its premium revenue on medical care.

McDonald’s and trade groups say the percentage, called a medical loss ratio, is unrealistic for mini-med plans because of high administrative costs owing to frequent worker turnover, combined with relatively low spending on claims

McDonald’s, in a memo to federal officials, said "it would be economically prohibitive for our carrier to continue offering" the mini-med plan unless it got an exemption from the requirement to spend 80% to 85% of premiums on benefits

The issue of limited-benefit plans has also hit colleges, which face the same 80-to-85% requirement beginning next year.

"Having to drop our current mini-med offering would represent a huge disruption to our 29,500 participants," said McDonald’s memo, which was reviewed by The Wall Street Journal. "It would deny our people this current benefit that positively impacts their lives and protects their health—and would leave many without an affordable, comparably designed alternative until 2014." …

Insurers say dozens of other employers could find themselves in the same situation as McDonald’s. Aetna Inc., one of the largest sellers of mini-med plans, provides the plans to Home Depot Inc., Disney Worldwide Services, CVS Caremark Corp., Staples Inc. and Blockbuster Inc., among others, according to an Aetna client list obtained by the Journal. Aetna also covers AmeriCorps teaching-program sponsors, who are required by law to make health coverage available

Benefit consultants anticipate that, by 2014, most employers will stop offering mini-med plans. Such plans likely wouldn’t meet the definition of adequate coverage for full-time workers. Under the law, midsize and large employers that fail to offer such coverage will have to pay a fine

Apparently, McDonald’s is now denying that they are considering dropping any healthcare benefits.

From Fox News:

McDonald’s issued a statement Wednesday denying that it planned to drop coverage for its employees and defending its benefit plans.

"We’ve had the opportunity to speak with regulatory agencies directly to better understand the implications of the law and to share our point of view," Steve Russell, a senior vice president with the company, said in the statement. "Moving forward, we will continue to have an open dialogue with legislators as well as regulators."

But it doesn’t sound like much of a denial to us. Even so, you know they and the other similarly situated companies are thinking long and hard about dropping health insurance benefits.

(Thanks to BillK for the heads up.)

This article was posted by Steve on Thursday, September 30th, 2010. Comments are currently closed.

10 Responses to “McDonald’s Might (Not) Drop Health Plan”

  1. BillK says:

    Look at what mean, evil McDonald’s is doing!

    It must be horrible to have both the President and his wife want you out of business…

    From the Wall Street Journal:

    McDonald’s May Drop Health Plan

    By Janet Adamy

    McDonald’s Corp. has warned federal regulators that it could drop its health insurance plan for nearly 30,000 hourly restaurant workers unless regulators waive a new requirement of the U.S. health overhaul…


    Oooh, not just “extravagant” rates, but caps on benefits, too?

    This is why we need Obamacare, don’t you see?

    • Liberals Demise says:

      Obama will go down in history as the “Oxide Dork”. Everything the dork touches………rusts!


    • JohnMG says:

      …..”Its insurer, BCS Insurance Group of Oak Brook Terrace, Ill……”

      That must really tweak ol’ Barry’s melons. Imagine a company from Illinois (his own adopted State) being the first skunk at his garden party.

      Somehow this only seems appropriate.

  2. Liberals Demise says:

    Looks like the regime isn’t satisfied with just taking the toys out of the “Happy Meal” for children. This isn’t the first stone to fall and it won’t be the last, dingleBarry.

    Taking the country by force!!
    (one clown at a time)

  3. GetBackJack says:

    I could afford health insurance when it was offered to me as a consumer (the 60s). But after the businesses of America got into the act by offering insurance as a perk of employment the ability to purchase in a free market where competition kept everything in line began to rapidly diminish. Now I can’t afford any kind of Insurer-to-consumer insurance.

    Not that I would. I despise what it’s become.

    But when Nixon did the Wage/Price freeze in 1971 is when health insurance began it’s malformation from a consumer product subject to competition to a Gimme from business (creating the very sense of Entitlement) to the federal government deciding that it’s an employer’s GOD ORDAINED RESPONSIBILITY TO PROVIDE FOR YOUR HEALTH CARE COSTS and now all is doo doo.

    I swear I’m locked up on a prison planet for the insane at the edge of the galaxy where the rest of civilization sentences it’s worst offenders to keep them away from decent people.

    • JohnMG says:

      I agree with most of what you’ve posted, jack. But what we are reaping are the unintended consequences of political tinkering.

      As you say, insurance used to be affordable on the open market. Then government began ratcheting up the taxes on peoples income causing people to object to the bracket-creep they experienced and which accompanied pay raises. So the loophole that was created in the legislation became the relief valve for punitive taxation.

      Now, tax-and-spend politicians’ greed for tax revenues are causing them to attempt closing that tax-dodge loophole, too.

      When government gets out of the way, the market corrects itself. But then, the manipulators lose their absolute power over the people. Whenever they start with the “increase taxes on the rich” shtick, it’s only a short jump to the “everybody is ‘the rich’ taxation trap.

      We have arrived–with Obamapelosireid at the wheel.

    • proreason says:

      The high cost of insurance is deliberate.

      a. We know that 3 of the key factors that drive health insurance costs up are mandates (i.e., I have to pay for your expensive drug rehab treatment, even though drug addiction is only a disease in libwit land), and the inability of insurers to sell across state lines, and tort laws that encourage frivolous lawsuits because it costs nothing to sue and there are no penalties if you lose.

      b. We know that state-run health care has long been the nirvana that socialists / communists have been seeking as the magic bullet to get their boots on our necks.

      c. We know that nobody is interested in state-run health insurance when the cost is low.

      So we now see the decades-long strategy to make private health insurance unaffordable, and to therefore give the state a reason to ram commissar healthcare down our throats.

      Now we see all of the little ‘goodies’ in Obamycare….mandates to cover pre-exising conditions, penalties for this and that, more restrictions on plans and free enterprise solutions.

      It’s working perfectly to make private insurance unaffordable.

      Energy is next in line.

      How long are we going to bend over for this crap.

    • Rusty Shackleford says:

      Excellent synopsis. The genie is definitely out of the bottle.

    • tranquil.night says:

      You’re getting dangerously succinct in your understanding of all this madness, Pro. It’s a continued pleasure having your expertise here. If I can go off-script a moment, It might be wise to install a few security cameras on your compound. Now that Net Neutrality is officially shelved, their last option is gonna have to be in sending the Labor thugs after you. I don’t imagine that being a fair fight for them though.

  4. GetBackJack says:

    I got a big dose of understanding market manipulation tactics when I was a 13 year old busboy at a local restaurant/lounge and came to the knowledge of why the salty, salty peanuts and pretzels were free.

    Then at 19 I lost even more innocence when, as a Surgical Tech handing instruments in surgery (making money for college), in a doctors lounge changing into scrubs I overheard an OBGYN describe his cash flow needs to another surgeon. “I do four total hysterectomies every day whether they need them or not. I’ve got cash flow needs and they no longer need that plumbing”. That was a warning shot across my bow about Experts and Trust.

    The death of my innocence and the beginning of my hard core hatred of politicians and their schemes came when doing research on the Vietnam War and discovered (a) Ford built the plant in Russia that was supplying the trucks that went to North Vietnam to haul the munitions and supplies that were killing guys my age and then (b) uncovered Lady Bird Johnson was the owner of record (majority shareholder, actually) of the concrete company contracted to pour all the cement at Cam Ranh Bay. While guys my age were being killed, people were making money from a military conflict. LBJ never held anything but public sector jobs and retired a millionaire many times over.

    The last nail in the blazing hatred of all things Washington came the day I read RED COCAINE. Google it.

    EVERYTHING is manipulated. Nothing is straight forward. All is corruption.

    All of it.

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