McDonald's May Drop Health Plan

[n2doc]

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.

The move is one of the clearest indications that new rules may disrupt workers' health plans as the law ripples through the real world.

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.

more

http://online.wsj.com/article/SB10001424052748703431604575522413101063070.html

[Jkid]

1. The main they don't want to follow the law is simple.

It will cut into their profits.

[Statistical]

2. Which is one the glaring loopholes in HCR.

It sets minimum requirements for OFFERED plans but no requirement to OFFER any plan.

Govt: if you offer insurance you MUST offer x, y, and z and at terms a, b, and c.
Company: OK. We are dropping insurance.
Govt: ???? Damn we didn't see that coming.

In full disclosure there is a penalty for companies which don't insure their workers however the penalty is relatively small (compared to the cost of insurance). Who knows likely companies can fully or partially offset their taxes by the penalty paid.

Another tidbit from the article:
"The new rules at issue apply only to fully insured health plans and not those where the employer absorbs the risk and directly pays out medical claims. The rules wouldn't affect Wal-Mart Stores Inc., for instance, because it is self-insured."

Interesting .... So McDonald could do like Walmart and self insure and then they can payout as little as they want. 80%, 70%, 50%, hell even 19%.

[seabeyond]

3. having been a business owner, offering health care to employees.... it is tough

i dont know this particular problem... but there are huge problems. hubby felt it a responsibility as owner (his words) that he be able to offer healthcare. it. was. a. nightmare.

that was one of the big reliefs in selling business, not having to deal with healthcare. one of the reasons we sold.

[pipoman]

4. IOW the insurance premiums are in fact revenue streams

for McDonalds. It could be compared to scrip from years gone by. Scrip was issued by companies to employees and given instead of money. The scrip had to be spent in company stores which again made money off the sale of over priced goods to the poor employees.

[TreasonousBastard]

5. If you read the article, you would know this is not a revenue stream.

[pipoman]

11. It isn't a revenue stream for anybody?

Then what could the possible argument be for not spending 80% of collected premiums on actual services? Let's see here...30000 employees x $32 = $960,000 weekly premiums x 52 weeks = $49,920,000 annually in premiums x 20% = $9,984,000 to administer this plan. Someone is certainly using this as a revenue stream.

[Statistical]

13. Blue Cross Blue Shield is the insurer.

Any profits are going to them. Your claim that McDonalds only offers this as a "company store" style scam missed the mark.
Of course you profit number assumed that 100% of employees opted for the most expensive plan. The lower cost plan is $13 per week.

McDonalds claim is that if the 85% requirement is imposed BCS will simply not offer coverage or not coverage at current rates (and higher rates would be unfordable to their low-paid employees).

[pipoman]

17. Maybe McDonalds should look at that...

and offer to pay the couple of dollars per week for their underpaid indentured slaves employees.

[TreasonousBastard]

18. First, define "actual services." Then you tell me how much it costs to administer a plan...

with tens of thousands of employees and a large turnover. Are the salaries and phone bills of claims adjusters an overhead expense or a loss expense?

FWIW, when I was an underwriter, I got hit with 5% of my net premiums going to home the office IT dept. I also got hit with smaller amounts for things like rent, the company cafeteria... And I had very few policy audits or changes requiring a huge clerical staff.

[Statistical]

7. Nope. Insurance is offered by BCS

Also this tidbit makes it more clear:

"The new rules at issue apply only to fully insured health plans and not those where the employer absorbs the risk and directly pays out medical claims. The rules wouldn't affect Wal-Mart Stores Inc., for instance, because it is self-insured."

The only way McDonalds would profit from these plans is IF they self insured and IF they self insured they wouldn't be subject to the restriction.

Now it is entirely likely that in the future McDonalds WILL self insure to get around the limits however even self insured doesn't necessarily mean the company profits from it. Many large companies like GM self insure because it cuts out the profit from middle man (insurance companies).

[StandingInLeftField]

6. I think this is just a red herring on McDonald's part.

Many minimum-wage employers (especially large corporations) "offer" health insurance as an incentive to prospective employees. It's only after the employee has worked off their "trial" period (sometimes as much as six months) and begins to wonder when they will be eligible for health insurance - and also to wonder why they are getting less hours - that they realize that only "full-time" employees (=/> 40 hours weekly) qualify for health insurance.

Moral? ALWAYS ask to see and READ the employee handbook prior to beginning work. If no handbook is available, ask in the interview and have it put in writing. If that's a no-go, I'd consider continuing the search if insurance is a make-or-break for you.

edited for clarity

[Statistical]

9. McDonalds offers health insureance to all employees (part time or full time)

with no minimum number of hours.

Also per a related article 30,000 employees are currently on the plan.

[StandingInLeftField]

10. Thanks for that info.

That's what I get for extrapolating from the Health & Beauty industry. I'll be more careful in the future.

[Statistical]

12. No I agree most minimum wage employer offer crappy benefits ...

and also McDonalds plan isn't exactly the best but at least they offer something.

[Bluenorthwest]

20. They have about 30,000 current participants

And you need to understand that most who take a job with McDonald's are not in a position to 'continue the search', make demands around hire, or any of that.
But don't let facts stand in your way. These workers are on this plan right now. Like it or not they are real human beings.

[StandingInLeftField]

21. Hi! Nice to meet you too!

I realize that many people who work at minimum wage don't have a choice. I currently have no health insurance whatsoever and am $100,000+ in debt for a recent heart attack and three stents. So, please don't patronize me.

Now, if you had read my other comment, I was extrapolating from the beauty industry, where it is common to lure cosmotologist in with full-coverage promises and then not give them enough hours to qualify. My daughter has had that happen to her twice now. I guess what I was trying to say was "be careful." I'll certainly be careful around you from now on.

[TreasonousBastard]

8. The "medical loss ratio" requirement is becoming a big problem now that...

everyone is trying to figure out just what it really is. More of these plans will be cut if they don't come up with something soon.

There's a major meeting of insurance commissioners and others coming up trying to figure it all out, but things like preventive care, fraud investigations, etc are being questioned as medical benefits by some consumer advocates who don't know the first thing about medical treatment or insurance. Or much of anything else.

[pipoman]

14. Also, I would argue that

a plan which pays a max. of $2,000 isn't really helpful. The policy holders could get this treatment with or without insurance. It is catastrophic health issues which will result in denial of services, which are actually life threatening.

[n2doc]

16. No , but it did give them access to cheap prescriptions

and checkups. and vision care. And probably lower negotiated rates than the uninsured get. Which is more than you get with no plan. There were also plans that paid more:

[pipoman]

19. Another issue which should have been addressed with

HC bill..."negotiated rates" for health services should be outlawed...HC providers should be required to offer services to everyone at the same price.

[TBF]

15. This is why Obama was irresponsible in taking Medicare for all

off the table - before the discussion even started.

Our choice as a country is whether we use the taxes we collect to fund war (killing people) vs. fund health care, education, infrastructure, etc... (things to help people).

Unfortunately time after time we see that "killing people" wins.