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HealthCare Reform: McDonald's to End Coverage?

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By Tanya Roth, Esq. on October 01, 2010 9:57 AM

Reports of the death of the McDonald's mini-care health plan may have been greatly exaggerated. The company is responding sharply today to reports that requirements under the healthcare reform law are causing the fast-food giant to cancel the mini plans it offers its hourly workers. Some news sources, acting on internal memos from the company, reported the cancellation. McDonald's denies the reports.

An ABC News report is covering the reaction of the company to a report in the Wall Street Journal that the "mini-med" plans are on their way out. "Media reports stating that we plan to drop health care coverage for our employees are completely false," said Steve Russell, a senior vice president and head of human resources for McDonald's, in a written response to the article.

Health and Human Services Secretary Kathleen Sebelius weighed in as well, writes ABC. "The McDonald's story is flat-out wrong, and I am sorry that they were not more accurate in their reporting," Sebelius said at a reporters' breakfast organized by the Christian Science Monitor. Despite the black eye sustained by the WJS, their article is not the only reason the media is reporting concerns that plans such as the one offered by McDonald's might be disappearing faster than its hamburgers.

According to ABC, the healthcare reform law has a requirement, applicable to all plans issued as stand-alone coverage, that they meet a certain medical loss ratio. The medical loss ratio measures the ratio of medical expenses to administrative spending and sets the amount of spending that must go to actual care, rather than to administrative overhead.

The medical loss ratio guidelines are a laudable goal, but they can have an effect on those who can only afford a mini-plan like McDonald's workers. Those plans could take a hit from the ratio guidelines because, ABC reports, they have a higher overhead due to the high turnover of workers like those at McDonald's.

ABC reports nearly 30,000 McDonald's employees currently participate in these plans, which supply a maximum of $2,000 to $10,000 a year in basic medical coverage. This coverage costs employees about $728 to $1,820 a year. Other large retailers like Home Depot, Disney, Blockbuster and Staples offer employees similar plans.

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