McDonald's Claims Health Insurance Report Untrue

Published: Fri 01 Oct 2010

Tiffany Strong

Thursday, McDonald's and government health officials refuted a newspaper article indicating that the fast-food restaurant might eliminate health insurance coverage for its close to 30,000 hourly workers.

The newspaper, The Wall Street Journal, published a story to that effect based on a company memo. The article alleged that McDonald's would drop health benefits if United States regulators failed to waive a requirement of President Obama's new health care reform bill.

Officials from McDonald's claimed the report was "completely false."

"This story is wrong," said Jessica Santillo, the spokeswoman for the U.S. Department of Health and Human Services, in a statement Thursday. "The new law provides significant flexibility to maintain coverage for workers."

The fast-food chain has taken issue with the health care overhaul's stipulation that "mini-med" health insurance plans devote a minimum of 80 percent of revenue from premiums to health care expenses, the paper reported on its Website Wednesday.

In the memo, McDonald's cautioned federal regulators that it would be "economically prohibitive" for its medical insurance provider to continue to insure hourly workers if it does not receive a waiver to the 80-percent minimum stipulation, the paper reported. Government officials claim they have made no promises that such a waiver will be given, it reported.

"This story is premature as guidance on the new medical loss ratio rules has not even been issued," said Ms. Santillo. "The administration is working closely with businesses like McDonald's that are committed to providing health benefits to protect health coverage for their employees."

McDonald's Defense

Officials at McDonald's previously dismissed the report as "purely speculative and misleading."

"McDonald's is committed to providing competitive pay and benefits," said Steve Russell, the corporation's chief of human resources, in a statement.

"We've had the opportunity to speak with regulatory agencies directly to better understand the implications of the law and to share our point of view," he stated.

Most of the fast-food chain's franchisees provide a limited-benefit health plan in which almost 30,000 hourly workers are enrolled, with enrollment now twice as high as it was in 2005, said Russell.

A large number of hourly workers at McDonald's are insured with the "mini-med" plans and pay roughly $14/week for a policy limiting annual benefits to $2,000 per year, or another policy for which they pay $32/week that limits annual benefits at $10,000, according to the Journal.

The law had been crafted to restrict premiums from being used for executive compensation, marketing, and other non-healthcare-related uses, the report said.

The newspaper article referenced a quote from a U.S. Department of Health and Human Services official that said regulators do not want companies to eliminate coverage because of the health care reform law. The paper said McDonald's refused to divulge its present medical-loss ratio.