Only one problem, as Jon Cohn points out. It's not going to happen, and that's actually a bad thing.
First, the basics: One of the new regulations about to take effect under the Affordable Care Act requires that insurers spend no less than 80 to 85 percent (depending on the kind of insurer) of money on actual patient care, rather than overhead, marketing, or profit. McDonald's isn't happy about that. In a memo it submitted to the Obama Administration last week, the company says that the insurance it provides some 30,000 employees won't meet that standard and that, without some kind of special waiver, they would likely have to drop the policies. It's just the latest in a string of complaints and warnings that the fast food industry has made about what it believes is excessive regulation of employer provided health insurance.
By this morning, both McDonalds and the administration were saying the story is overblown. McDonalds says it has no plans to drop the coverage and that it's been in discussions with the administration over how to make sure it can keep offering the policies. The administration is saying much the same thing--that it's aware of the issue, has been talking to industry representatives, and has already made clear these plans will be exempt from some of the early regulations on insurance.
More important, the administration has yet to finalize the rule about how insurance companies spend their money (or what is known as the "Medical Loss Ratio".) It's entirely possible the administration will phase in the requirement slowly. Most likely, then, McDonald's employees who like these plans will get to keep buying them, at least for the immediate future.
So no, McDonald's is not going to drop its mini-med plans. The bad news is mini-med plans are horrible and dropping them would force McDonald's to provide real health insurance options.
But is that a good thing? As the Journal story makes clear, the policies in question are so-called mini-med plans with very limited benefits. In the case of McDonald's, according to the Journal, there are two options: Employees who go with the minimum plan pay $14 a week for a policy that won't cover more than $2,000 in medical bills a year. Employees who opt for the "generous" option pay about $32 a week for a policy that maxes out at $10,000.
Stop and run the math on that. $14 a week for $2000 coverage in a year. $728 dollars on a minimum wage burger flipper salary to cover $2,000 in medical bills per year, max. That's not insurance, that's a scam. paying $1668 a year for $10,000 in coverage isn't much better. You can eat that up in just one ER visit. So yes, the Obamacare regs would make these plans invalid. Odds are good McDonald's will get their waiver.
In the long run, McDonald's employees need policies that protect them in case of serious medical problems. And they need policies they can afford. They'll get those policies thanks to the Affordable Care Act--but not until 2014, because the administration and Congress couldn't come up with enough money to implement the full scheme sooner.
And you can thank the GOP for that. E.D. Kain has more on those 2014 plans, too. When they get here.