In Grilling Over Healthcare, McDonald's Admits Huge Gap Between Exec, Worker Plans
Yesterday on Capitol Hill, McDonald's (MCD) waded awkwardly into healthcare politics as it faced a grilling over its "skimpy" health insurance for workers. Instead of successfully defending its practices, McDonald's painted a picture of a company that has gaping inequalities between what it offers corporate employees and store managers and what's available to the low-paid hourly workers who flip your Big Macs and fry your McNuggets.
Summing up the mood in the room, Sen. Barbara Boxer chided: "That just makes my heart beat fast, and not in a good way."
Boxer and others were reacting to data provided by Rich Floersch, McDonald's executive vice president for human resources, that showed the company coughs up only between 10% and 20% of hourly store workers' insurance premiums, while it picks up a generous 80% for most corporate employees and restaurant managers. Making matters worse, hourly workers not only shell out most of the cost of their McHealthcare -- amounting to $710 in 2011 -- but they're entitled to coverage of only $2,000 a year. Corporate employees, on the other hand, have unlimited benefit allowances.
McDonald's also offers its hourly workers plans with $5,000 and $10,000 limits, but those are considerably more expensive, and most employees opt for the $2,000 plan.
McDonald's says it's proud of the health insurance it offers to workers, but Floersch's data raises the question of whether the company's so-called scaled-down mini-med plans do more for corporate PR than for its low wage employees. Texas Republican Sen. Kay Bailey Hutchison called the $2,000 annual benefit cap "not a good limit."
This is not the first time McDonald's has stumbled with healthcare. In September, the Wall Street Journal got wind that McDonald's was lobbying for an exemption to a provision in the new healthcare law that requires health plans spend at least 80% to 85% of their premium revenue on medical care (called a medical loss ratio), instead of overhead or salaries. The article prompted fears that McDonald's would dump its coverage altogether, a scenario the company vehemently denied.
McDonald's and other carriers of mini-med plans got their exemption, but that led to Floersch packing his bags for Washington for yesterday's Senate fleecing as part of a probe mini-med plans, which Democrats are not fond of.
The reality is that McDonald's inequitable insurance system is probably standard for many restaurant and retail companies. But since the fast food chain took the lead in lobbying for the exemption, they're the ones taking the heat.
As to why McDonald's pushed so hard for the exemption that got them into this mess in the first place -- that remains a mystery. They don't appear to need it. Floersch told the Senate Committee on Commerce, Science, and Transportation that the medical loss ratio for McDonald's store workers' insurance plan has ranged from 78% to 91% over the past five years, with 86% in the most recent year, making McDonald's fully compliant with 85% threshold in the law.
Image by Flckr user blmurch
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