The Spectacle Blog

WSJ: McDonald’s May Have to Drop 30,000 Health Plans Due to ObamaCare

By on 9.30.10 | 9:34AM

McDonald's has put federal officials on notice that it may have to drop health insurance for 30,000 employees unless it gets an exemption from a new requirement in the national health care law, the Wall Street Journal reports.

ObamaCare forces insurers to pay out at least 80 percent to 85 percent of the revenue they receive in premiums on paying out claims, a percentage known as the medical loss ratio. The problem is, that's especially difficult to manage in so-called mini-med plans which offer scaled down benefits at a lower price, but have higher administrative costs due to a lot of worker turnover.

If the rule doesn't get altered, its ramifications could be greater than McDonald's -- as there are 1.4 million people with mini-med plans.

The McDonald's move is just the latest in a series of revelations that undermine the promises Democrats made when they were selling ObamaCare.

In May, burger chain White Castle announced that a separate provision in the law could cut its earnings in half, causing it to curtail expansion plans and slow hiring.

In June, an administration document revealed that more than half of those with coverage from their employers may have to change plans as a result of ObamaCare.

Earlier this month, insurers announced that they would have to raise premiums, partially as a result of new rules that force them to offer certain benefits.

And just this week, Harvard Pilgrim announced that due to new requirements and reimbursement rates under ObamaCare, they'd have to discontinue Medicare Advantage plans that currently serve 22,000 customers in Massachusetts, New Hampshire and Maine.

None of this is surprising and in fact was entirely predictable. It would be imposible to make sweeping changes to the health care system without disrupting current coverage. Even my prefered route, which would equalize the tax treatment of all health insurance, would likely mean that a lot of people would have to change plans. Ultimately, I think they'd end up better off, because we'd have a more competitive market, and they'd be able to choose a policy that suits their budget and medical needs, and they'd be able to take it with them from job to job. But the problem is that Obama and his allies spent more than a year explicitly promising that nobody would have to lose their current coverage from the health care legislation.

For instance, in June 2009, he told the American Medical Association:

(N)o matter how we reform health care, we will keep this promise to the American people: If you like your doctor, you will be able to keep your doctor, period. If you like your health care plan, you'll be able to keep your health care plan, period. No one will take it away, no matter what.

That quote -- and many more like it -- will continue to haunt Obama and Democrats in the months and years to come.

UPDATE: McDonald's is now disputing the report.

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