KHN Morning Briefing

Summaries of health policy coverage from major news organizations.

After McDonald’s Flap, White House Says It Will Exercise ‘Discretion’ On Medical Loss Ratios

The Wall Street Journal: The Obama administration said Thursday that Health and Human Services Secretary Kathleen Sebelius will "exercise her discretion" in enforcing the medical loss ratio requirement of the health law. The comment comes after a report in The Journal Thursday that "McDonald's warned federal regulators it could drop its health-insurance plan for nearly 30,000 restaurant workers unless regulators waive a new requirement of the health overhaul. The requirement, known as the minimum medical loss ratio, concerns the percentage of revenue received from premiums that must be spent on benefits. McDonald's is among the retailers and restaurant chains that offer a 'mini-med' limited benefit. Most of these plans don't meet a 2011 requirement that they spend 80% to 85% of premiums on medical benefits instead of overhead expenses."

The administration says it may allow certain waivers, but that officials can't guarantee such a move because it is still awaiting guidance on the issue from state insurance regulators. "Already federal regulators have approved dozens of waiver requests-including one from McDonald's-that their insurers be relieved from having to meet a new $750,000 minimum cap on annual benefit payouts. Employers said the cap endangered mini-med plans" (Adamy, 10/1).

None of that stopped Sebelius from telling The Christian Science Monitor Thursday that the story about McDonald's dropping such coverage was "flat-out wrong." ABC News has video of the comments and a story (9/30).

Chicago Sun-Times: "Oak Brook-based McDonald's offers limited coverage to workers at 10,500 mostly franchised restaurants, letting employees pay $32 a week for coverage capped at $10,000 a year, the Journal reported Thursday." McDonald's has such health plans for nearly 30,000 hourly employees (Guy and Knowles, 10/1).

UPI has McDonald's response, which also calls The Journal story "completely false."

"The reports are 'purely speculative and misleading,' the statement said. The company and its franchisees 'have been a leader in offering a fully insured limited benefit plan to hourly restaurant employees for more than 10 years,' the corporate statement said. … 'Regardless of how the regulations evolve over the next several months, McDonald's is committed to providing competitive pay and benefits, and the strongest employment opportunities possible,' it said" (9/30).

Chicago Tribune: "The Obama administration says [a] key [health law] tenet is designed to expand medical benefits and hold insurance companies to more rigorous standards. McDonald's and the Obama administration took issue with the accuracy of a published report on the dispute Thursday, saying the restaurant chain has no plans to drop health coverage for employees. But McDonald's said it may have to replace its plan with another form of insurance." Once the federal government issues guidance on the medical loss ratio provision, "insurance companies should know what is classified as a medical expense. Aside from expenses on doctors and hospitals, insurance experts say medical costs are related to quality of care and services, such as a 24-hour nurse call line used to manage a chronic condition, for example" (Japsen, 9/30).

The Associated Press: "Limited benefits plans have grown popular the past few years as health care costs have climbed, said Steve Wojcik, vice president of public policy for the National Business Group on Health. Employers in the retail or hotel industries offer this basic coverage as a way to keep workers and improve employee productivity by cutting health-related absences. About 1.4 million workers have group health care coverage through limited benefits plans, according to the National Restaurant Association, which doesn't track growth of the plans." Mini-Med plans often have medical loss ratios in the 70 percent range or below (Murphy, 9/30).

 The Hill's Healthwatch Blog: House Republicans seized the opportunity to blast the health reform law. "The report wasn't overlooked by Republicans on the House Ways and Means Committee, who blasted it to reporters Wednesday as evidence that the new law will harm patients" (Lillis, 9/30).

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