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McDonald's may bag health insurance

Sept. 29, 2010 at 9:58 PM   |   Comments

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WASHINGTON, Sept. 29 (UPI) -- McDonald's Corp. is warning U.S. regulators a provision of the new healthcare law could lead to a loss of coverage for 29,500 workers, a company memo indicated.

The fast-food giant said it would jettison health insurance for tens of thousands of its hourly restaurant workers if regulators don't waive a requirement of the healthcare reform legislation that 80 percent to 85 percent of premiums go to actual benefits, The Wall Street Journal reported.

A high-level McDonald's official informed the Department of Health and Human Services last week the company's insurer won't meet the benefits requirement that goes into effect in the coming year, the Journal said. The company didn't say what level it could reach.

The McDonald's workers are among about 1.4 million Americans covered under so-called mini-med plans offered by low-wage companies. McDonald's and others say the requirement is unrealistic for mini-med plans because overhead costs are too high with frequent worker turnover and relatively low spending on claims.

The requirement is meant to prevent insurers from overspending on executive salaries, marketing and other costs not directly related to patient care. McDonald's told federal officials "it would be economically prohibitive for our carrier to continue offering" the mini-med plan unless it got an exemption.

The insurer, BCS Insurance Group, declined to comment, the Journal said.

"Having to drop our current mini-med offering would represent a huge disruption to our 29,500 participants," said the McDonald's memo, which was reviewed by the Journal. "It would deny our people this current benefit that positively impacts their lives and protects their health, and would leave many without an affordable, comparably designed alternative until 2014."

© 2010 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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