Free Markets, Free People

Mickey D and health care – an exception to the rule?

Over on Memeorandum, there’s a frenzy of writing about a Wall Street Journal report that says McDonalds may drop its health care plan as a result of the impact of ObamaCare.

Note the operative word – "may". It doesn’t say it will, it doesn’t say it might, it says it "may" drop it because of the type of health insurance it offers and the impact of new regulations governing what amount of money must be spent by insurance companies for care. Specifically:

The requirement concerns the percentage of premiums that must be spent on benefits.


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.

It is called the "medical loss ratio", but in reality it is government telling a business how it must spend its money. What the business is telling the government is, given the type of insurance offered by the business, driven primarily by the type of business it does, it won’t be able to comply with the regulation and will have to drop it’s present coverage altogether.

Of course this is bad news for the administration which is still out there pushing the lie that if you like your insurance nothing changes and you get to keep it.  Naturally this flies right in the face of the lie and it’s such a high profile company that, well, something has to be done.

Like, make them an exception to the rule maybe?  You know, special interest government.  If you’re big enough and you can cause us enough embarrassment, we’ll “except” you from that which we require all the other drones to comply.

And that appears to be exactly what’s in the works if Jonathan Cohn is to be believed:

By this morning, both McDonalds and the administration were saying the story is overblown. McDonalds says it has no plans to drop the coverage and that it’s been in discussions with the administration over how to make sure it can keep offering the policies. The administration is saying much the same thing–that it’s aware of the issue, has been talking to industry representatives, and has already made clear these plans will be exempt from some of the early regulations on insurance.

Of course those plans obviously aren’t yet exempt since one assumes the legal team at Mickey D’s was able to successfully interpret how the new law would apply to them.  So what Cohn is really saying is “nothing to see here citizen, move along, nothing to see” – a fairly routine attempt at spinning a situation in which the administration got caught with its pants around its ankles on the road in front of a school into one that’s “no big deal”. 

But it is a big deal.  And, if “these plans” are exempt, why?  And which plans aren’t exempt.  Is Burger King off the hook too?  How about Taco Bell?

More importantly, where does the government get off telling a business how to spend its money?  Cohn tells us it is because the want to make sure executive salaries and perks aren’t excessive and overhead is kept to a minimum.  I say it is plain and simple unwarranted government intrusion that is becoming all too familiar since this administration has been in charge:

More important, the administration has yet to finalize the rule about how insurance companies spend their money (or what is known as the "Medical Loss Ratio".) It’s entirely possible the administration will phase in the requirement slowly. Most likely, then, McDonald’s employees who like these plans will get to keep buying them, at least for the immediate future.

Good thing we can read the bill now to find out what’s really in it, isn’t it?



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11 Responses to Mickey D and health care – an exception to the rule?

  • If McDonalds ran their business the way the government does, you’d drive up to the window or walk up to the counter, pay for a lunch, get it, and then open it to find out what was inside.
    Our friends living  in Washington see no problem with this approach.

    • Wrong!  You could count on getting your order in a few months.  If you didn’t like it, or it made you ill or killed you outright, you would have no recourse in court.  Heckovadeal.

  • Oh, I forgot, if they REALLY ran it the way Washington does, you’d be required by law to eat lunch at McDonalds every day.

  • ….at least for the immediate future.

    I am simply suffused with comfort and joy.

  • This is just another example of government not understanding the situation , again.  I can’t imagine an idiot like Waxman or Pelosi or Reid having a clue that high volume, hi transaction rate business requires more overhead.  That is exactly why no one in Congress raised an alarm over the $600 1099 requirement.  It never occurs to them to ask how transactions are processed and what the cost of processing really is.
    We are going to see a lot more of this.   We have Sebelius threatening insurance companies. Waxman threatening AT&T, Pilgrim dropping Medicare Advantage policies, children only policies going away, and now this.  If government were not so eager to get their hands on the health care system, they would just give up the whole idea in disgust realizing they can never figure out how to run this system.  This is Hayek and Friedman and Mises writ large on the impossibility of centralized control of the economy.  We are governed by fools.

  • According to Chris Matthews, McDonalds is doing this to spite Obama

    • That’s always the answer, there’s never economic realities involved, it’s always partisan racism, even by companies that may have contributed to his election campaign.

      I’m surprised MSNBC hasn’t tried to use the same sort of excuse to explain how their viewer market share is something just north of the community channel segment of the Grand Prairie Paint Drying club.  Not that they don’t provide rich creamy news and opinion, but rather that the viewers aren’t watching them just out of partisan, possibly racist, spite.

  • Here is how I see this medical loss ratio playing out.  First there will be a wave of consolidations as the bigger insurance companies gobble up the smaller ones that can’t make the cut.  This is already happening.  The government, insisting on coverage for just about everything and anything drive up the costs of insurance and the companies raise rates.  The big government crowd throws a hissy fit and demands that insurance companies spend more on health care and raise the medical loss ratio to 90%.  This drives out even more companies.  Rinse and repeat till you have one company left standing.  Nationalize it and you’ve got your single payer system.
    ObamaCare is designed to fail.