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McDonald’s Could Drop Health Coverage; Obamacare the Hamburgler



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There has already been much discussion about the news from the WSJ today that McDonald’s Corp. has asked the feds to waive new restrictions on “mini-med” plans under Obamacare, lest it be forced to drop health coverage for 30,000 hourly workers.

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.

The continued purging of mini-med plans isn’t unexpected (I noted it back in June). But the McDonald’s brand-name puts it in bold. Mickey D’s is a huge employer of the very working poor the Affordable Care Act was ostensibly designed to help most. It’s bad enough that the bill will close the market for affordable coverage to these low-wage hourly workers, and replace it with a sure-to-be-hideously-inefficient, perversely-incentivized set of subsidies for plans some workers may not want or need. It’s worse that it won’t do so until 2014.

What is Jimmy on the fry station supposed to do until then?

UPDATE: John McCormack has it from Kathleen Sebelius that HHS is considering granting McDonald’s its waiver. The problem is there aren’t yet any regulations to waive:

This morning, Sebelius outlined the two-step process by which McDonald’s may get an exemption.

“One is a waiver about limits,” Sebelius said. “We have that in our administrative authority. And McDonald’s came into hhs and discussed that with our folks two weeks ago, and within 48 hours we approved their waiver.”

But Sebelius explained it is too early to grant McDonald’s the second waiver it may need to find it economically possible to continue offering these plans. “The medical loss ratio issue is one that isn’t even settled,” said Sebelius. “We do not have the report yet from National Association of Insurance Commissioners, which by law has to inform our regulations. We haven’t written a reg., we can’t waive the reg. that doesn’t even exist. We have assured the folks at McDonald’s and others that as soon as we have a regulation that has a process in it we will begin those discussions.”



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