Editore"s Note
Tilting at Windmills

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September 30, 2010

WANT FRIES WITH THAT NON-STORY?.... The headline on the Wall Street Journal front page raised eyebrows: "McDonald's May Drop Health Plan." So, too, did the lede: "McDonald's Corp. has warned federal regulators that it could drop its health insurance plan for nearly 30,000 hourly restaurant workers unless regulators waive a new requirement of the U.S. health overhaul."

Politico labeled the article a "bombshell," and it's already caused quite a stir. That's a shame because the story is weak and misleading.

At issue here is the medical loss ratio -- a new rule that forces health plans to spend 80% to 85% of premium dollars on providing actual medical care, rather than everything else (marketing, executive salaries, overhead, etc.). According to the report, McDonald's has told the administration it thinks that's a standard that the company won't be able to meet, which would lead it to drop coverage for up to 30,000 employees.

HHS has already called the article "flat out wrong," and McDonald's has said the report is "completely false."

But if you're like me, your first response to the article might have been, "Wait, McDonald's offers health insurance to workers behind the counter?" The answer is, sort of. Jonathan Cohn has a very helpful explanation of what's going on here:

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.

To call that "insurance" is to distort the definition, since these policies would do very little to help people with even moderately serious medical conditions.... 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.

For now, some fast-food workers can take advantage of the law's early benefits, like the temporary insurance plans for people with pre-existing conditions that the administration and the states have been starting. But for the most part these people will have to wait.

While they're waiting, is there a chance the ACA will force a company like McDonald's to scrap the meager mini-med "insurance" plans these workers currently have? Not really. As Igor Volsky noted, the administration hasn't even come up with medical loss ratio regulations yet, and is already working with companies on phased-in exemptions and flexible standards to deal with issues until 2014.

In other words, there's just nothing here. The freak-out among opponents of health care reform has about as much merit as all of their previous freak-outs.

Update: Reader A.C. reminds me that the news, such as it is, isn't even new. The WSJ flubbed this in a big way.

Steve Benen 12:40 PM Permalink | Trackbacks | Comments (19)

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Steve, there seems to be a formatting error here; I think a dangling bold tag from the headline here, making the entire blog bold. Probably an easy fix, but a very welcome one~

Posted by: Kyorosuke on September 30, 2010 at 12:43 PM | PERMALINK

McDonald's press release from Steve Russell, Senior Vice President and Chief People Officer McDonald’s USA.

"Media reports stating that we plan to drop health care coverage for our employees are completely false. These reports are purely speculative and misleading.


Posted by: Luther on September 30, 2010 at 12:46 PM | PERMALINK

A mainstream, right-leaning media outlet publishing a breathless story that confounds fact to convey the evils of HCR, just before an election?


Posted by: terraformer on September 30, 2010 at 12:56 PM | PERMALINK

"Flubbed" presumes their intent was to convey accurate and impartial information.

Posted by: Anthony Damiani on September 30, 2010 at 1:03 PM | PERMALINK

Do the McDonalds employees have to smile when they accept this insurance?

Posted by: Bob M on September 30, 2010 at 1:05 PM | PERMALINK

Are these McDonalds employees with the $2000 "health plan" counted as insured Americans?

Posted by: reduced on September 30, 2010 at 1:13 PM | PERMALINK

Are these McDonalds employees with the $2000 "health plan" counted as insured Americans?

This, in a country where you can legally call Velveeta™ 'cheese', is a silly question.

Posted by: Davis X. Machina on September 30, 2010 at 1:16 PM | PERMALINK

The WSJ used to have top-notch reporting and a moronic, shitty editorial page. Under Murdoch's leadership, the Journal has become a more consistent product.

Posted by: hells littlest angel on September 30, 2010 at 1:19 PM | PERMALINK

The WSJ flubbed this in a big way.

They put into circulation another anti-consumer and anti-administration lie that will zombify itself and become part of conventional wisdom even though the "story" was quickly debunked.

In other words, it worked exactly as they intended.

Posted by: dr. bloor on September 30, 2010 at 1:36 PM | PERMALINK

How is McDonald's spending more than 20% of the premiums for an in-house plan on "marketing, executive salaries, overhead, etc."?

Posted by: Folacin on September 30, 2010 at 1:41 PM | PERMALINK

The fact that this story is not true should not, in any way, minimize the important point, which is that the story is true. And Obama's fault. Because it's in the paper. And newspapers never lie. And now, all those McDonald's employees who regularly read the Wall Street Journal will know that Obama's NOT on their side AT ALL.


Posted by: slappy magoo on September 30, 2010 at 1:47 PM | PERMALINK

Regardless of whether this specific story is true or not, it is worth remembering -- as demonstrated by the pathetic minimed plans that McDonald's provides -- that corporations do not want to provide health insurance to their employees (other than gold-plated plans to senior executives). Employer-provided health insurance is an archaic system. Having to provide it makes U.S. companies less competitive internationally and contributes to off-shoring of jobs.

HCR provided us with a glorious opportunity to fundamentally reshape our insurance system. Instead of immediately selling out to the insurance industry, believing that their lobby was simply too powerful to oppose, the Obama administration should have taken some time to make inroads into the business community.

Ideologically, many corporate executives oppose government in principle. But I believe that they care about their bottom lines more. And if Obama had pitched this as a way to make U.S businesses more profitable and competitive, he could have slowly gained a critical mass of business people to back a public option system, if not full single-payer.

This might have taken 2, 3 or 4 years to accomplish, but the end result would have been worth it.

Posted by: square1 on September 30, 2010 at 2:06 PM | PERMALINK

They'll get those policies thanks to the Affordable Care Act

Yeah, they'll get them, and pay for them out of their pockets. Or pay a fine.

Posted by: kc on September 30, 2010 at 2:15 PM | PERMALINK

Flubbed the story, or printed a story designed to make the ACA look bad 4 weeks before the election?

Posted by: Perspecticus on September 30, 2010 at 2:25 PM | PERMALINK

You mean to tell us that Rupert Murdoch's rag told a lie? No, no, no, no, no! It couldn't happen!

Posted by: Magic Dog on September 30, 2010 at 3:29 PM | PERMALINK

No doubt we will hear that story quoted all week long from the usual suspects... Fox, Rush, Palin's Facebook page... and did Drudge have a link?

Of course none of the usual suspects will ever admit the story is wrong.

Posted by: KJ on September 30, 2010 at 3:34 PM | PERMALINK

$32 a week for $10,000 coverage? My much smaller employer gives me great options at about $15 a week, with a current $1.5 million cap. What a rip-off!

Posted by: ak on September 30, 2010 at 8:23 PM | PERMALINK

The WSJ flubbed this in a big way.

It seems Politico did too.

Posted by: Bonnie on September 30, 2010 at 9:47 PM | PERMALINK

"The WSJ flubbed this in a big way."

Years ago I used to read the front page middle column in the WSJ that was a list of important news for the day. It was well done and the referenced articles never had any kind of a slant. The editorial page was fit only as a toilet paper substitute. Now, as hell's littlest angel has pointed out, both of them fit in the latter category thanks to Murdoch bringing the WSJ down to the financial equivalent of Fuchs Nous. Isn't there some way to cancel his naturalization and send him back to Australia?

Posted by: Texas Aggie on October 1, 2010 at 1:01 AM | PERMALINK



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