WANT FRIES WITH THAT NON-STORY?…. The headline on the Wall Street Journal front page raised eyebrows: “McDonald’s May Drop Health Plan.” So, too, did the lede: “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.”
Politico labeled the article a “bombshell,” and it’s already caused quite a stir. That’s a shame because the story is weak and misleading.
At issue here is the medical loss ratio — a new rule that forces health plans to spend 80% to 85% of premium dollars on providing actual medical care, rather than everything else (marketing, executive salaries, overhead, etc.). According to the report, McDonald’s has told the administration it thinks that’s a standard that the company won’t be able to meet, which would lead it to drop coverage for up to 30,000 employees.
HHS has already called the article “flat out wrong,” and McDonald’s has said the report is “completely false.”
But if you’re like me, your first response to the article might have been, “Wait, McDonald’s offers health insurance to workers behind the counter?” The answer is, sort of. Jonathan Cohn has a very helpful explanation of what’s going on here:
As the Journal story makes clear, the policies in question are so-called mini-med plans with very limited benefits. In the case of McDonald’s, according to the Journal, there are two options: Employees who go with the minimum plan pay $14 a week for a policy that won’t cover more than $2,000 in medical bills a year. Employees who opt for the “generous” option pay about $32 a week for a policy that maxes out at $10,000.
To call that “insurance” is to distort the definition, since these policies would do very little to help people with even moderately serious medical conditions…. In the long run, McDonald’s employees need policies that protect them in case of serious medical problems. And they need policies they can afford. They’ll get those policies thanks to the Affordable Care Act — but not until 2014, because the administration and Congress couldn’t come up with enough money to implement the full scheme sooner.
For now, some fast-food workers can take advantage of the law’s early benefits, like the temporary insurance plans for people with pre-existing conditions that the administration and the states have been starting. But for the most part these people will have to wait.
While they’re waiting, is there a chance the ACA will force a company like McDonald’s to scrap the meager mini-med “insurance” plans these workers currently have? Not really. As Igor Volsky noted, the administration hasn’t even come up with medical loss ratio regulations yet, and is already working with companies on phased-in exemptions and flexible standards to deal with issues until 2014.
In other words, there’s just nothing here. The freak-out among opponents of health care reform has about as much merit as all of their previous freak-outs.
Update: Reader A.C. reminds me that the news, such as it is, isn’t even new. The WSJ flubbed this in a big way.
