McDonald’s denies report it would drop health insurance unless government waives requirement

Thursday, September 30, 2010

McDonald’s denies report of dropping health care

OAK BROOK, Ill. — The fast-food restaurant chain McDonald’s Corp. has denied a report that it’s considering dropping health care coverage for some employees in response to a health care reform provision.

The Wall Street Journal reported Wednesday that McDonald’s, the world’s largest hamburger chain, has warned regulators it could drop its plan for some 30,000 workers unless the government waives a new requirement in the health care overhaul. The paper cited a memo from McDonald’s to federal officials.

The paper said that last week, a top McDonald’s official told regulators its insurance plan won’t meet a requirement for next year that it spend at least 80 percent to 85 percent of its premium revenue on medical care.

McDonald’s said Thursday in a statement it has been speaking with federal agencies to understand the law, but the company called reports that it planned to drop health care coverage for employees “completely false.”

The statement said McDonald’s was committed to providing competitive pay and benefits regardless of how regulations evolve over the next several months. The company said most of its franchisees offer limited-benefit health plans to its hourly workers.

Health care reform calls for individual and small and large group health insurance plans to spend a certain percentage of the premiums they take in on medical care or offer a rebate to their customers. This provision has stirred some concern that insurers will drop out of markets if they can’t meet these so-called medical loss ratios. That could lead to fewer choices for consumers.

The National Association of Insurance Commissioners has been studying this issue for months in order to make recommendations to Health and Human Services Secretary Kathleen Sebelius on how it should be implemented, starting next year. Some commissioners have suggested recently that minimum percentages should be phased in, to avoid insurance market instability.

“The new law provides significant flexibility to maintain coverage for workers,” an HHS spokesperson said in an e-mail. “The administration is working closely with businesses like McDonald’s that are committed to providing health benefits to protect health coverage for their employees.”

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