The other day I had lunch with the CEO of a chain of nursing homes, and over crab cakes and salads, he brought up a news story about McDonald's Corp. warning the feds that it might drop its limited benefit health insurance plan for nearly 30,000 hourly workers if regulators do not waive a new requirement of healthcare reform.
According to The Wall Street Journal, McDonald's sent a memo to the Department of Health and Human Services (HHS) warning that it would be “economically prohibitive for our carrier to continue offering the mini-med plan” unless it got an exemption from the requirement to spend 80% to 85% of premiums on benefits.
“A lot of nursing home companies have the same problem,” the CEO observed. “Many of us provide basic, limited coverage plans to lower-level employees, and those plans might not meet the coverage requirements under the new law. No, they do not provide catastrophic coverage, but they do provide some level of care.”
But, he said, nursing home companies might actually have to end those plans and accept the penalty contained in the law for companies that do not provide coverage, forcing those employees to choose coverage from the government. “With the low margins in our industry, we just can't afford it,” the CEO said.
The story said federal officials indicated there is no guarantee they can grant mini-med carriers a waiver, adding that the answer may not be provided by November when many employers require employees to sign up for the coming year's benefits.
However, HHS Secretary Kathleen Sebelius later said McDonald's may get a waiver from the requirement so it can continue offering limited benefits plans to its workers. McDonald's later denied that its min-med plans would be dropped if it didn't get the waiver.
The issue is complex, but the bottom line is that millions of workers across the nation currently participate in such plans, including those offered by long-term care industry employers. While one of the objectives of health reform is to provide coverage for more Americans who lack it, an unintended consequence may be to actually deprive many Americans from the basic coverage they currently enjoy.
That very point was made by Sebelius during a press briefing within days of The Wall Street Journal article. “We need to work with companies to see what is available,” she said. “Our goal isn't to destabilize the market. The bottom line for some will be: Is this coverage better than no coverage at all?”
The HHS secretary acknowledged that some of the mini-med plans “are pretty good for the money that the employee pays and what they cover.” But she added, “Others are just not good at all.”
Congressional health reform supporters will continue to examine the issue, Sebelius predicted. “Do people really have insurance coverage? What does it provide them? What are the prices? Are they served poorly or well by the marketplace? My guess is that will continue,” she said.
Meanwhile, Sen. John D. “Jay” Rockefeller (D-W. Va.), chairman of the Senate Committee on Commerce, Science, & Transportation, got into the act. He sent a letter to BCS Financial Corp., McDonald's insurer, asking for five years' worth of data on benefits, premiums, and administrative expenses. He said McDonald's plan's $2,000 maximum annual coverage is entirely insufficient.
Earlier, in a message to American Health Care Association/ National Center for Assisted Living (AHCA/NCAL) members in which he analyzed the impact of the health reform law, association CEO Bruce Yarwood cautioned members not to overreact to the employer insurance requirements. “The employer insurance mandates included in the health care reform law seem to have triggered a great amount of member concerns,” he wrote. “While many of the details are still to be determined through regulations, it is important to know that these provisions do not take effect until 2014.”
Yarwood noted that many AHCA/NCAL members already provide healthcare coverage, “which puts you in good stead when we look at these employer insurance mandates.” He said the organization will be working with Congress to help resolve some of the troubling issues raised by the new law.
Bob Gatty has covered governmental developments of the trade and business press for more than 30 years. He is founder and president of G-Net Strategic Communications, Sykesville, Maryland. Long-Term Living 2010 November;59(11):14-15