Back during the debate over the recently passed health care bill, President Obama repeatedly stated that “if you like your health care plan, you can keep your health care plan.” This is proving to be increasingly as untrue as skeptics said it was.
McDonald’s has become the latest company to state that increased regulations built into the bill are going to make it untenable for the company to continue offering partial health insurance plans to some 30,000 hourly employees:
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.
Democrats who drafted the health law wanted the requirement to prevent insurers from spending too much on executive salaries, marketing and other costs that they said don’t directly help patients. […]
Insurers say dozens of other employers could find themselves in the same situation as McDonald’s. Aetna Inc., one of the largest sellers of mini-med plans, provides the plans to Home Depot Inc., Disney Worldwide Services, CVS Caremark Corp., Staples Inc. and Blockbuster Inc., among others, according to an Aetna client list obtained by the Journal. Aetna also covers AmeriCorps teaching-program sponsors, who are required by law to make health coverage available.
Those pesky unintended consequences just keep cropping up. One hopes McDonald’s won’t be hearing from Health and Human Services Secretary Kathleen Sebelius for promoting “misinformation.”
Speaking of unintended consequences, it’s really quite unfortunate that health care seems to be yet another area (environmental extremism and Walmart/Target hatred are others) where the actual day-to-day interests of lower-income people have once again been sabotaged by those purporting to think in their best interests.
For those interested, Avik Roy at Forbes has a good writeup with more details on why the 80-85% expenditure requirement is going to mean higher private insurance rates for many:
Last Friday, the National Association of Insurance Commissioners—the association of the 50 state insurance commissioners—issued its draft guidelines for how insurers will need to calculate “medical-loss ratios,” or MLRs. The wonkiest among you will recall that the medical loss ratio is loosely defined as the dollar amount that an insurer spends on the health care of its beneficiaries, divided by the total dollar amount the insurer collects in premiums. Section 2718 of our new health care law mandates that insurance plans sold to individuals and small employers must spend at least 80 percent of their premiums on health care, and plans sold to large employers must spend at least 85 percent. […]
And this isn’t just my opinion. Maine Superintendent of Insurance Mila Kofman wrote a letter to HHS Secretary Kathleen Sebelius, asking Sebelius to waive the MLR rules for Maine until 2014. “One insurer has indicated its intent to pull out of individual markets (and has explicitly named one state where that decision has already been made),” wrote Kofman. “Prior to 2014, implementation of an 80% medical loss ratio requirement may destabilize the individual health insurance market in Maine.” Maine currently has a state MLR requirement of 65 percent; eliminating 15 percent of an insurer’s budget in three months is no small task.
