What the NYT Keeps Getting Wrong About McDonald's and Healthcare Reform
Despite receiving federal waivers on one insurance requirement of the Affordable Care Act, McDonald's and other large companies with low-wage workers are still waiting to find out whether they will get another waiver that would allow them to continue offering "mini-med plans" to their employees. The Obama Administration has not yet decided whether it can afford to provide the latter exemptions to these retail and restaurant firms without unraveling its health insurance reforms.
For some reason, the NYT's Reed Abelson doesn't seem to get this simple fact. In a piece entitled "Waivers Address Talk of Dropping Coverage," Abelson writes, "As a result of the administration's efforts, McDonald's says it is 'confident that we'll continue to provide health care coverage for our 30,000 hourly restaurant employees.'"
Obviously, McDonald's made this statement to defuse the furor over news reports that it might drop coverage. (The White House was also concerned enough about these reports to contact BNET after we posted our article on the topic.) But the waivers to which the Times article refers apply only to minimum coverage requirements for health plans. Under these waivers, McDonald's and 29 other companies and groups will be allowed to keep their mini-med plans for one year, even though these plans pay annual benefits as low as $2,000. (The legally required minimum for other policies is $750,000 this year, rising to unlimited coverage in 2014.)
As Abelson acknowledges in his piece, the insurers who offer mini-med plans must also pay out a minimum percentage of their premiums for patient care, starting Jan. 1, 2011. This minimum "medical-loss ratio" is 80 percent for plans designed for small employers and 85 percent for those underwritten for large firms, including McDonald's and many of the other companies that received the waivers on coverage requirements.
In a memo to the Department of Health and Human Services, McDonald's said that it might have to stop offering its mini-med plans because the carrier that provides them would not be able to meet the minimum medical-loss ratio specified in the Affordable Care Act. This has not changed. In fact, as Abelson points out, it looks increasingly unlikely that the Administration will grant waivers for mini-med plans on medical-loss ratios. Knowing this, it's hard to understand why Abelson -- and, by extension, the NYT -- takes McDonald's statement at face value.
An article in Crain's Chicago Business quotes Kathleen Sebelius, Secretary of Health and Human Services, as saying that about 50 companies, including McDonald's, have requested waivers on the medical-loss ratios. Sebelius said her department cannot make a decision on this issue until the National Association of Insurance Commissioners advises HHS on how to define medical-loss ratios. (NAIC has issued a policy draft, but has not officially presented it to HHS yet.)
So despite the happy talk from McDonald's, the fate of mini-med plans is definitely still up in the air at the moment. And even if they survive for another few years, they will be banned starting in 2014, when the state insurance exchanges start up. When that happens, look for McDonald's and its ilk to pay the statutory fines to the government and let their workers fend for themselves on the insurance market.
Image supplied courtesy of Flickr.
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