McDonald's Employees Won't Be Lovin' It Quite So Much When They Lose Their Health Coverage Thanks to ObamaCare

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Hoo-ray fer the gubmint!

Mickey D's says it will have to get rid of its current health coverage for its 30,000 workers if forced to abide by one of the new health care law's regulations:

Trade groups representing restaurants and retailers say low-wage employers might halt their coverage if the government doesn't loosen a requirement for "mini-med" plans, which offer limited benefits to some 1.4 million Americans.

…While many restaurants don't offer health coverage, McDonald's provides mini-med plans for workers at 10,500 U.S. locations, most of them franchised. A single worker can pay $14 a week for a plan that caps annual benefits at $2,000, or about $32 a week to get coverage up to $10,000 a year.

Last week, a senior McDonald's official informed the Department of Health and Human Services that the restaurant chain's insurer won't meet a 2011 requirement to spend at least 80% to 85% of its premium revenue on medical care.

McDonald's and trade groups say the percentage, called a medical loss ratio, is unrealistic for mini-med plans because of high administrative costs owing to frequent worker turnover, combined with relatively low spending on claims.

Stories like these help illustrate why health economist James C. Robinson argued that medical loss ratios, which were developed purely as an accounting tool, were "never intended to measure quality or efficiency" of care.

You can imagine a company like McDonald's having a lot of trouble with a regulation that requires it to spend a certain percentage of its premium dollars on medical care. Its workforce skews younger because the company hires a lot of teenagers and college-aged employees. But while those employees might take advantage of the inexpensive plans, they tend to go to the doctor and file claims less frequently. But the company also hires large numbers of low-skilled workers who might not get health coverage elsewhere. And as State University of New York professor Jerry Newman, who went "undercover" as a McDonald's worker for a book, tells the Journal, those plans might not be the strongest, but "for those who didn't have health insurance through their spouse, it was a life saver." Its those workers who would likely be hurt the most if the company were to cease current coverage. Some of those workers would have alternatives; its workers could enroll in Medicaid or purchase subsidized insurance through the new state-based exchanges. But the exchanges don't kick in until 2014 in most states, meaning many workers could simply be out of luck until then.

More on medical loss ratios here, here, and here.

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  1. Obamacare is working exactly as planned.

    1. Yup, pretty soon they’ll start saying this isn’t working because businessmen are too greedy to do their part so we HAVE to implement single-payer. Exactly as planned.

  2. Their sacrifices for the greater good will be remembered. But not covered.

  3. Even with the years of study that Congress and its staff put into crafting the highly complex PPACA, they seemed to have missed this single, unintended consequence. Won’t happen again.

    1. LOL. Good one.

  4. The sooner we get rid of capitalism, the better. You fuckers will have to give up food stamps to suck Ron Pual’s cock.

    1. GO TROLL SOMEWHERE ELSE.

    2. How insighful.

      Max is, by the way, vying for the much coveted Patty Murray Complete Lack of Intellectual Competence Award.

      1. And holding a sizable lead.

    3. You spelled “Paul” wrong. You transposed the a and the u. Not a big deal, it happens.

      1. Fuck all of you! I’m never coming back to this websight! Just like I promised earlier this year!

  5. This is the jello principle at work.

    Think of regulation as brick, and business activity as a bowl of jello. Put the brick on the jello, and the jello squishes out from under it.

    Happens every time. Remember the Iron Law:

    Foreseeable consequences are not unintended.

    1. That’s exactly right. Displaced people will blame the company, not the government, for this. Naturally, they’ll clamor for increased government regulation to address the problems created by increased government regulation.

      Around and around we go.

      1. “Displaced people will blame the company, not the government, for this.”

        They will certainly be encouranged to think that by the administration and the lapdog media.

        The HHS secretary is already spinning like a top to claim any and all of the negative consequences are “misinformation” put out by insurance companies.

        1. Yes. Misinformation that must be combatted by vigorous “re-education”.

          On, and by extending these poor confused corporations gracious invitations to totally impartial congressional hearings devoted to ensuring that that nice company they have there won’t fall victim to any tragic legal problems or IRS audits in these dangerous economic times.

          1. Soon, all of My subjects will be re-educated. It’s for your own good.

      2. You bet. My employer is about to announce a 15% increase in the co-pay for health insurance (parallel to the increase the company will pay.) Already, one fellow employee is saying the announcement will unfairly blame Obama for the increase and such propaganda from employers should not be permitted.

      3. That’s right. We’re on the road to single-payer.

    2. Foreseeable consequences are not unintended.

      So the US military intended to kill thousands of Afghan and Iraqi civilians during the past decade?

      1. Yes.

        But they did not do it deliberately. Civilian deaths are something that happen in war. You minimise them by fighting decisively and winning quickly.

        1. This. ^^

          The longer we pussy foot around and stretch out these conflicts, the more civilians will end up dead.

  6. Its almost like medical insurance has many local optimum points depending on a person’s age, health, and sex in a complex and nonlinear fashion. I think we should have one giant rigid bureaucracy to find these optima rather than 1000s of individuals exploring the possible space. Wait. No I don’t. That’s a terrible idea.

    1. If we increase the dimensionality of the problem, I’m sure it will get easier.

  7. You can imagine a company like McDonald’s having a lot of trouble with a regulation that requires it to spend a certain percentage of its premium dollars on medical care. Its workforce skews younger because the company hires a lot of teenagers and college-aged employees […] [T]he company also hires large numbers of low-skilled workers who might not get health coverage elsewhere.

    Read: They hire NON-Union workers. Smell the stench of Union involvement in this horrendous plan, yet? By making non-Union workers more expensive to hire because of these mandates, Unions have the door open to step in businesses that normally hire low-skill workers.

  8. Clearly, what’s needed is an amendment to the Obamacare law to FORCE McDonalds to continue this coverage.

    Problem solved. NEXT!

    1. Actually, that’s not the problem. It doesn’t sound like McDonalds minds providing this coverage. It’s just that it no longer complies with new regulations so they either have to junk it or pay a lot more for a more comprehensive plan. Since they operate on razor thin profit margins
      (who the hell would go there if they didn’t have low prices?), there’s really only one option.

      1. I think your sarcasm detector is broken.

  9. Clearly, what’s needed is an amendment to the Obamacare law to FORCE McDonalds to continue this coverage.

    Problem solved. NEXT!

  10. I’m lovin it.

  11. Comrades, our plan is working. Soon, the people will run from the junk peddlers and into the loving embrace of government run health food centers and our policy embrace.

    Equality for all forever in the food deserts! The corporations don’t care about people, only we do…come and sacrifice many of you freedoms at our altar!

  12. its workers could enroll in Medicaid or purchase subsidized insurance through the new state-based exchanges.

    Thanks to Obamacare, taxpayers will now foot the bill for something individuals and private companies used to pay for.

  13. Progressives are all about offering the needy a helping hand. Unfortunately, the process usually requires kicking those people to the curb before a hand is offered.

    1. Hey, blabbin’ our strategy is a surefire way to get your ass kicked.

  14. Nice company you have there McDonalds. It would be a shame if something were to happen to it because its executives were in need so some self criticism and re-education.

    1. Nice city you have there, Kat. It would be a shame if something were to happen to it because its officials were in need of some attitude adjustment.

  15. “A single worker can pay $14 a week for a plan that caps annual benefits at $2,000, or about $32 a week to get coverage up to $10,000 a year.”

    So they can spend $756.00 a year for $2,000.00 of coverage? What dumb ass would buy into this?

    1. Someone who can afford to pay a little bit of their income weekly but likely wouldn’t have $2,000 in one lump sum if something were to happen to them?

      1. What would $2,000.00 buy you in an emergency room or urgent care visit? It would make more sense to go uninsured and bank that money. Then arrange to make payments if anything over the savings ever happened.

        1. Even if an ER visit or somesuch cost more than $2,000, at least $2,000 of that is paid for, right? Say you have an ER visit that winds up costing $4,000. Would you rather have to pay the entire $4,000, or have $2,000 of that covered by your plan, thus making your total expense $2,756.00?

          (Assuming the plan straight up pays the whole $2,000 and doesn’t give you a bunch of BS about this and that thing not being covered, etc.)

          1. I see your point but that’s not what I would do, I would bank the money as explained above. I would then look for a policy that would cover me for those instances or get another job.

    2. Someone who doesn’t have $2,000.00.

      1. I am not the government’s ATM|9.30.10 @ 1:25PM|#

        What would $2,000.00 buy you in an emergency room or urgent care visit? It would make more sense to go uninsured and bank that money. Then arrange to make payments if anything over the savings ever happened.

    3. ya, that is pretty much the oppoosite of what they need. They should get coverage for everything over 2000 and get a credit card to use only in case of emergency for the first 2000. But hey, if they were financial geniuses they wouldn’t be working at McDonalds.

    4. So they can spend $756.00 a year for $2,000.00 of coverage? What dumb ass would buy into this?

      Not only that, but a McD worker who loses their company insurance but gets on a national exchange will have better coverage for less.

      John Cole’s blog has the numbers:

      I went over to the Kaiser Family Foundation to take a look at what I might qualify for under the healthcare law if I were a single McDonald’s worker (using 2014 dollars). Generously assuming I’d make $10/hour (I believe shift managers make about $9.81/hour) I calculate my yearly salary at $20,800 ? or about 181% of poverty.

      Turns out I’ll be on the hook for a premium of about $1127 a year, or about $21 per week. That’s $11 less a week than I’d pay for McDonald’s mini-med benefits. But instead of yearly maximum benefit of $10,000 I’d have no maximum benefit at all since maximum benefits are no longer legal. And I’d only have a maximum out-of-pocket expense of $2,083. This plan ? a ‘silver’ plan under the new law ? is going to be quite a lot better than McDonald’s, actually:

      The maximum out-of-pocket costs the person/family will be responsible for in 2014 (not including the premium) is $2,083. Whether a person or family reaches this maximum level will depend on the amount of health care services they use. Currently, about one in four people use no health care services in any given year. The guaranteed plan for the person/family will have an actuarial value of 87%. This means that for all enrollees in a typical population, the plan will pay for 87% of expenses in total for covered benefits, with enrollees responsible for the rest. Specific provisions like deductibles and copayments may vary from plan to plan, and out-of-pocket costs for any given individual or family will depend on their health care expenses. Preventive services will be covered with no cost sharing required.

      McDonald’s could also take advantage of the free choice vouchers built into the law (another fingerprint of the excellent Ron Wyden) which allow people to opt into the exchanges even if their employer provides coverage.
      Either way, I’ll take my silver plan any day over the mini-med McDonald’s plans. A $10,000 maximum benefit provides no real health insurance at all, though it’s better than nothing. We really should have fought for universal catastrophic insurance starting immediately, which would have taken the teeth out of reports like this one. And if I were a McDonald’s employee, I’d be hoping against hope that I could lose the crappy mini-med plans and get onto an exchange as quickly as possible. Though hopefully not before 2014?.

      (P.S. As a cashier making $7.51 an hour I would be on the hook for a yearly premium of $494 or about $9.5 a week. I’d get far, far superior health coverage for about $4.50 less a week than the cheapest McDonald’s plan, which caps benefits at $2,000 ? $83 less than my out of pocket maximum on the silver plan which has an actuarial value, at this income, of 94%.)

      So what is being touted as a bad thing will turn out to be a good thing once the exchanges come about (2014).

      Instead of paying a lot of money for shitty coverage, you will get good coverage for not a lot of money.

      But facts don’t matter around here since OBAMACARE WILL RUIN THE WORLD!!!!!111!!!11

      1. I’m glad you agree with my comment but in no way do I support “Obamacare”

        The correct way would be to limit government regulation of the medical and health care industry, reform medical malpractice insurance, and get back to the user dealing directly with the provider for fees and payment.

      2. But facts don’t matter around here since OBAMACARE WILL RUIN THE WORLD!!!!!111!!!11

        It’s almost like you believe that making a law to produce particular results will actually produce those results and no others.

        1. It’s almost like you believe that making a law to produce particular results will actually produce those results and no others.

          No, I believe that if you are going to be an honest broker of information you should be honest about facts, even if they don’t tend to validate your particular world view/ideology/preferences.

          In the long run, this case is an example of a better outcome for McDonald’s workers — but instead it is being held as an example of how “Obamacare” is ruining the ability of low-wage workers to spend a lot of money on a shitty product.

          1. So what you’re saying is that having the state pay for free shit for people who otherwise would have had less shit, but paid for by themselves, is an unalloyed good.

            Shouldn’t the fact that the plan under ObamaCare IS NOT SELF-FUNDING be counted as a negative?

            1. Shouldn’t the fact that the plan under ObamaCare IS NOT SELF-FUNDING be counted as a negative?

              Hazel,

              You are pulling a bait and switch here.

              Should your fact be counted as a negative with regards to what? The outcomes for the employees of of McDonalds? No the funding scheme/mechanism/profitability isn’t a negative worth discussing in this context.

              This point of this post is to point out how Obamacare is having a negative effect on the benefits employees of McDonalds receive — that they used to get insurance, but now because of Obamacare McD might have to pull their crappy mini-med plans.

              Whether its self-funding or paidfor is a very different point/discussion and that wasn’t Suderman’s gripe in this post.

              It’s a post about outcomes. (Suderman is stating that because of the new onerous regulations of Obamacare, employees might lose their coverage while ignoring the fact that based on the numbers for the exchanges, these employees will be able to buy into a much better plan for less money than what their employer is offering.And that is quite dishonest

      3. Neglecting the fact that the money to pay for, subsidize, this improve coverage will destroy the country fiscally.

        It will be so awesome to have all the free healthcare when my personal savings have been devalued and we’re pushing wheelbarrows full of dollars down the streets.

  16. Mini Medical coverage is total BS – Insurers scam to make money on young and healthy people. 10K a year in coverage, big deal! What if they actually have cancer. Go ahead, lets keep on getting ripped off by insurance scams, people don’t know the difference when they are getting ripped off. Stupid people

    1. What if you need a pony? What are you going to do then? I realize you are probably a liberal which means you spent your schools taking Chicano studies rather than math. So it might come as a shock to you that 10,000 is greater then zero. And a mini policy is a lot better than no policy.

      1. I don’t think the original poster was defending Obamacare — just saying that low-cap insurance is not a good deal.

        And your analysis seems to forget that the insurance isn’t free. The premiums for the $2000 plan add up to about $700 a year, while the premiums for the $10000 plan add up to about $1600 a year.

        So basically, unless there’s a 16% chance of you racking up $10000 of medical bills in a year, that’s a crappy deal (since it doesn’t protect against a truly catastrophic illness, which would exhaust the coverage almost immediately).

        1. Yes and no. Mathematically it is a crappy deal. But if you flat out don’t have the 10K to lose, it is worth over paying to have the coverage.

          And as someone pointed out below, the people who buy it obviously think it is a good deal. Who are we to say they are wrong?

        2. All insurance is a crappy deal, or insurance companies would be going broke.

          I hope I pay WAY more in life insurance premiums than “I” collect. That doesnt make life insurance a bad deal.

          But, yeah, these mini-med plans probably arent very good deals. But so fucking what?

    2. If they don’t like it, they don’t have to pay into it. It’s their choice.

      Or, it was their choice.

    3. 10K would about cover a broken bone or some other accident related health problem that young people are most likely to get.

      1. It’s pretty unlikely for someone under 30 (the vast majority of McDonald’s workforce) to get cancer.

        Even the lower end $2000 coverage would have paid for all of my medical bills between the ages of 20 to 30.

        1. And during those 10 years you would have paid $7000 in premiums.

          1. No one’s saying it’s a perfect plan. It’s kinda crappy. But for some people, it might be worth having. Also, McDonald’s doesn’t (morally) HAVE to offer their employees a good plan, or even any plan at all.

            Dislike the plan if you want, but it really isn’t important to the central point of the article.

          2. “”And during those 10 years you would have paid $7000 in premiums.””

            Which sucks more, the insurance or working at McDs for 10 years?

      2. So would the $1600 in premiums you pay each year.

        And it’s possible that the fine print says they don’t cover accidents, a common occurrence for cheap medical insurance plans.

        1. Given many employees have made the calculation that our plan is in their interest, why do YOU have a problem with it? More importantly, why should that matter to the contracted parties?

          1. I think you’re engaging in the “free choice is never wrong” fallacy common among libertarians. All the people who buy lottery tickets, claim 0 exemptions on their W-2, etc, are clearly making free individual decisions that are not in their interest, and it’s likely so are the McDonalds employees who purchase this insurance.

            Lack of coercion does not mean it’s a good idea.

            Obviously I don’t think McDonalds should be coerced not to have a plan like this, but it’s pretty

            1. It is pretty. Beautiful, in fact.

            2. No, choices are often wrong. But my choice about what’s best for you is far more likely to be wrong than your choice about what’s best for you. If the wrong choices are going to be made, it’s far better that the person who is going to have to live with the consequences of the choice be making it. Otherwise, you’re reducing the incentives to make the right choices. Incentives matter.

        2. I pay about $3k per year for my current health insurance. I havent been to a non-eye doctor in over 15 years. The $50 per year on eye visits isnt really worth it is it? I guess I should have gone without insurance and banked that money.

    4. P:

      Clarify your argument. Should young people just go without insurance then? Since they’re young and healthy? Or should they perhaps go with a high deductible catastrophic plan where they pay a low premium, but pay out of pocket for all the incidental sniffles, but will get covered if they get the cancer?

      I’m trying to help you here…

    5. if you buy mini-med and add a $10K deductible plan, you basically have comperehensive coverage. For quite a bit less than the cost of comprehensive coverage normally.

  17. Surely you realize that picture of President Obama as a whitefaced clown is both demeaning and racist?

    1. Demeaning to the joker you mean?

  18. Services that the restaurant chain’s insurer won’t meet a 2011 requirement to spend at least 80% to 85% of its premium revenue on medical care.

    Am I reading this right? The law requires businesses to spend 85% of its revenue on health care for its employees? What the fuck is this happy horseshit??

    1. no, they have to spend 85%+ of the insurance premiums they receive on health care, so basically administrative costs etc cannot be more than 15%

      these kinds of plans have a lot of administrative costs (many subscribers, low premiums, high turnover) so could not meet this test

    2. PPACA requires plans in the individual and small-group markets to achieve an 80 percent MLR, meaning they must spend 80 percent of their premium revenues on medical costs.

      HHS can grant waivers. Iowa and Florida have requested such waivers.

      Right now the fight is over what counts as medical costs.

      1. Large group health plans have to spend at least 85 percent

  19. with this regulatory change and the increase in minimum wage, it is as if this administration wants to make non-unionized labor more expensive

    i wonder who would be behind that?

    1. Santa Claus and Jesus.

  20. This is exactly what the singlepayers wanted all along–to create a catastrophe–a catastrophe that can only be resolved by massive government intervention.

    1. “Resolved” you mean. EAnything can be “resolved” by the government. It obviously “resolved” all the Anti-American hate it stirred up in the Middle East and it surely “resolved” the war on drugs (planned to be funded through fiscal year 2112).

  21. This is good news. We don’t want our kids eating junk anyway. See above. All we have to do is outlaw McDonalds and there won’t be any employees to cover. Problem solved.

    Let’s merge the US and Australia into one big pansy country.

    1. Why not put all the pansies in one place and people who like shooting guns, drinking beer, and eating meat in the other?

      1. Calgon, take me away!

      2. Sounds like Maryland and West Virginia.

  22. Let me be clear.
    Capitalism’s days are numbered. Get used to it. East Germany did.

      1. Sorry, but when Obama talks like that, it leaves me speechless.

        1. Personally, a thrill just went up my leg.

          1. All of us are thrilled, as we sit here at Denny’s enjoying our national convention! Down with capitalism!

          2. I think that’s called “urine”.

  23. Those evil corporations! How dare they obey the law!

  24. or its a public negotiation tactic with whichever company supplies the insurance now…

  25. Might wanna make sure your story is actually true before posting it, Petey.

    http://www.huffingtonpost.com/…..44950.html

    1. Oh, why bother to check the facts when you’re a wingnut?

  26. Might wanna make sure your story is actually true before posting it, Petey.

    From the linkie:

    “We’re not going to walk away from health-care insurance completely, but we’re going to have to look for alternatives if we can’t get the resolution we’re seeking from Health and Human Services,” McDonald’s spokeswoman Danya Proud told Bloomberg.

    I see nothing in that statement that disputes Suderman’s point that McDonald’s will likely get rid of its current plan.

  27. They’re Obama voters anyway. Poetic justice.

    1. I dont know if you are new around here or if spoofing, but if the former, you dont want to be lower-case joe.

      1. I am new. Why not?

        1. http://reason.wikia.com/wiki/Joe

          ^^^that is far too fair to him

          I recommend you capitolize your name to distinguish yourself.

          1. Thanks.

  28. I think you’re engaging in the “free choice is never wrong” fallacy common among libertarians.

    Consider the Iron Law:

    You aren’t free unless you are free to be wrong.

    Its never morally wrong to allow someone a free choice. The fact that they may exercise their freedom in ways that you disagree with does not, contrary to current statist dogma, make it wrong to allow them freedom.

  29. That which was predicted cannot be called unexpected.

  30. Meh, RC got it above. Well played, sir, well played.

  31. Responding to incentives is greedy, you selfish assholes.

    There should be a law against it. No responding to incentives. Ever.

  32. Of course, McDonald’s has said the story is false. But it fits the wingnut narrative, so there’s no need to check any facts. Well, let me correct that. When you’re a wingnut there’s never any need to check facts about anything at any time. The lie is all you know.

    1. That only mean they haven’t yet made up their minds about whether or not to drop the plans. Now, with all the publicity, they’ll have to wait until the story blows over.

  33. Fuck Ezra Klein. Fuck him with a spiky, acid-tipped dick.

  34. Can anyone explain why McDonald’s will get an exemption? How does our political system work? The squeaky wheel gets the grease?

    I thought that part of the point of the health insurance bill was to ensure that people got real coverage. While McDonald’s mini-med program is better than nothing, it certainly doesn’t come anywhere close to what the bill calls for.

  35. He is really looking a joker. I like McDonald.

  36. this is going to be common in the usa with this new law. it has been happening since it was just being thought about many individual health insurance from the states have been discontinued

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