McDonald's Health-Insurance Offerings May Be Fried

http://www.foxbusiness.com/markets/2010/09/30/mcdonalds-health-insurance-offerings-fried/

McDonald's Health-Insurance Offerings May Be Fried
Matt Egan
September 30, 2010

Unless regulators waive a requirement of the health-care overhaul, McDonald’s has warned federal regulators it could drop its health insurance plan for almost 30,000 hourly workers, The Wall Street Journal reported.

Last week, a senior McDonald’s official told the Department of Health and Human Services the hamburger chain’s insurer won’t meet a 2011 requirement to spend at least 80% to 85% of its premium revenue on medical care, the paper reported, citing a company memo.

McDonald’s disagrees with the overhaul’s requirement that “mini-med” insurance plans spend a minimum of 80% of premium revenue on medical care, the Journal said.

The fast-food giant reportedly told federal regulators it would be “economically prohibitive” for its insurance carriers to continue to cover hourly workers unless it gets a waiver on the 80% requirement. It added that having “to drop our current mini-med offering would represent a huge disruption to our 29,500 participants."

Restaurant and retailer trade groups have warned that employers could drop their coverage unless the government loosens this requirement.

However, the White House and McDonald’s pushed back against the Journal story.

“This story is wrong. The new law provides significant flexibility to maintain coverage for workers. Additionally, this story is premature as guidance on the new medical loss ratio rules has not even been issued,” Jessica Santillo, a Health and Human Services spokesperson, told FOX News.

In a statement released to reporters, Steve Russell, senior vice president and chief people officer at McDonald’s, said, “Media reports stating that we plan to drop health care coverage for our employees are completely false. These reports are purely speculative, misleading and intended to garner attention.”

McDonald’s said most of its franchisees offer a limited benefits plan and almost 30,000 employees are enrolled in medical coverage.

“We will continue to have an open dialogue with legislators as well as regulators,” Russell said.

McDonald’s stock didn’t appear to be influenced by the reports, falling 0.03% to $74.43 Thursday morning.