McDonald’s And Other Companies May Drop Their Health Insurance Offerings

Sep, 2010

They best be careful, otherwise they could receive a threatening nasty-gram from Kathleen Sebelius, a subpoena to appear on Capital Hill, or be part of an Obama campaign trail whine, or even the subject of a weekly address blameathon: McDonald’s May Drop Health Plan

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.

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.

If you like your plan, you can keep it. McDonald’s stated Wednesday, after the WSJ published the article, that it wasn’t planning on dropping coverage, most likely to avoid the nastygrams, subpoena’s, and Obama missives. Yet, if you read the entire article, delving into the details, it is easy to see that there is no way that McDonald’s, and other companies mentioned, such as the Home Depot, Disney, CVS, Blockbuster, and Staples can afford to offer full plans, due to their costs and the high turnover of employees.

“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.”

If the government forces McDonald’s and other companies to drop their min-med plans, you can certainly expect them to simply pay the fine, which would be much cheaper, which would harm these employees, and you can put the blame squarely on the Democrats. Since the mandated plans and personal coverage do not fully kick in until 2014, and there is no idea what those costs would be, these low income wage earners would be left with no coverage. Thanks, Democrats. It’s your legislation, man up, take responsibility for the devastation you have wrought.

Crossed at Pirate’s Cove. Follow me on Twitter @WilliamTeach. Re-Change 2010!