(Updated) ObamaCare Impact: McDonald’s Could Drop HC for 30,000 Workers

McDonald's health care plans for some of its workers could soon go the way of its trans fat cooking oil. That is to say, the fast food giant is considering dropping coverage for nearly 30,000 workers unless a mandate in the new health care law is changed, according to the Wall Street Journal.

The Journal reports that 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.

Currently, McDonald's offers "mini-med" programs to workers at 10,500 U.S. locations. Those plans allow a single worker to pay $14 a week for a plan that caps annual benefits at $2,000, or about $32 a week to get coverage up to $10,000 a year, the paper explains.

But, the WSJ says, McDonald's and trade groups say the percentage requirement, called a medical loss ratio, is unrealistic for mini-med plans "due to high administrative costs owing to frequent worker turnover, combined with relatively low spending on claims."

The requirement was originally included in the law by Democrats who wanted to curb executive compensation and other costs that lawmakers determined as not directly helping patients.

The Journal based its report on a McDonald's memo:

McDonald's, in a memo to federal officials, said "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. ...

"Having to drop our current mini-med offering would represent a huge disruption to our 29,500 participants," said McDonald's memo, which was reviewed by The Wall Street Journal. "It would deny our people this current benefit that positively impacts their lives and protects their health—and would leave many without an affordable, comparably designed alternative until 2014."

The Journal also points out that McDonald's move is just the latest example of possible unintended consequences from Obama Care: "Dozens of companies have taken charges against earnings—totaling more than $1 billion—over a tax change in prescription-drug benefits for retirees."

"We've had the opportunity to speak with regulatory agencies directly to better understand the implications of the law and to share our point of view," Steve Russell, a senior vice president with the company, said in a statement. "Moving forward, we will continue to have an open dialogue with legislators as well as regulators."

UPDATE:

McDonald's has since denied the Journal's report according to the Associated Press:

McDonald's said Thursday in a statement it has been speaking with federal agencies to understand the law, but the company called reports that it planned to drop health care coverage for employees "completely false."

Read the entire article.