McDonald’s says reform law provision threatens employee health coverage

The Wall Street Journal: "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."

A McDonald's official informed the Department of Health and Human Services last week that its 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" (Adamy, 9/30).

Bloomberg: "McDonald's Corp., the world's largest restaurant chain, asked federal health-care regulators to waive part of a new law that may force the company to seek an alternative insurance plan for some workers, an official said. … 'We're not going to walk away from health-care insurance completely, but we're going to have to look for alternatives if we can't get the resolution we're seeking from Health and Human Services,' [Danya Proud, a spokeswoman for the Oak Brook, Illinois-based company] said."

Meanwhile, Jessica Santillo, an HHS spokeswoman said the WSJ report was incorrect. "'The new law provides significant flexibility to maintain coverage for workers,' Santillo said in an e-mailed statement. 'Guidance on the new medical loss ratio rules has not even been issued,' she said... Annual caps and lifetime limits are being eliminated in an overhaul of health care as a way to ensure traditional insurance plans didn't drop patients' coverage when they needed it most, in the middle of a serious illness" (Stanford and Armstrong, 9/30).

Los Angeles Times also referenced the WSJ article, noting that an HHS official said the "government does not want employers to drop coverage because of the law" (9/29).

CBS News notes that "many restaurants do not provide health coverage" (9/29).