McDonald's Health Care Quandary Points to Issues in Reform

McDonald's, known for the Big Mac, dropped a bit of a whopper yesterday when they announced the possibility of dropping health care for nearly 30,000 employees.

McDonald’s may be known for the Big Mac, but yesterday they dropped a bit of a whopper when they announced they were considering dropping health care for nearly 30,000 hourly employees unless regulators waive a new requirement of the US health overhaul.

The requirement in question, which concerns the percentage of premiums that must be spent on health benefits, is perhaps the biggest sign yet that the ongoing efforts in health care reform are going to cause a lot of obstacles for some populations.

Although many restaurants do not offer health care coverage to employees, McDonald's was one of few to provide mini-med plans, in which a single worker can pay just $14 a week for a plan that caps annual benefits at $2,000. Workers also have the option to enroll in a premium plan which costs $32 a week and allows for coverage up to $10,000 each year. But a new requirement drafted by the Democratic Party in requires that businesses must spend 80-85% of its premium revenue on medical care, something which is just not feasible for mini-med plans because of high administrative costs due to frequent worker turnover, and because of low spending on claims. So while the purpose of the legislature was to prevent insurers from spending excessive amounts on executive salaries, marketing initiatives, and other costs, the fact is that the requirement could potentially hurt employees.

McDonald’s is not the only corporation that might run into trouble with the new mandates. The Wall Street Journal reports that “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. Aetna declined to comment; it has previously indicated that the requirement could hurt its limited benefit plans.”

So while McDonald's has grabbed the spotlight by questioning whether or not they will be able to continue their mine-med plans, the issue speaks to a much larger problem. Health care reform has been a hot topic for a couple years now, and as political leaders continue to push through legislation that is aimed at helping in the long run, many employees and families may have to struggle in the short term.

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McDonald's May Drop Health Plan [Wall Street Journal]

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