McD and medical plans
by Dan Crawford
There has been a little ruckus from the WSJ reporting on McDonald’s health insurance plans and applications for waivers from the 80% medical loss ratio requirement. Try to use that for a headline.
The medical loss ratio at 80% was one measure for evaluating whether enough % dollars of premium was actually going to medical expenses as opposed to salaries, advertising and marketing, and other non-medical expenses. I believe mini-med policies are far removed from plans offered that people associate with the term ‘health plan’.
McDonald’s had about 14,000 U.S. restaurants in 2009. Most of the company’s franchisees offer a limited-benefit plan and nearly 30,000 employees have chosen to be covered by the “mini-med” policies, Russell said.
Employees pay around $14 per week for a plan capping annual benefits at $2,000 per year, or a similar plan in which they pay $32 per week and annual benefits are capped at $10,000, according to the Wall Street Journal report.
Restaurants and retailers are more likely to offer such bare-boned plans because they have a high percentage of part-time and temporary workers and higher employee turnover than private sector employers overall.
The total market for limited benefit plans is about 1.4 million people, with Aetna Inc (AET.N) and Cigna Corp (CI.N) among the health insurers with the biggest presence, Wells Fargo analyst Peter Costa said in a research note.
Aetna’s largest limited benefit customer is retailer Home Depot Inc (HD.N) with 24,000 of those members, said Costa, adding that limited benefit plans account for a small portion of the overall health insurance market.
Another item that popped up is that Principlal Financial Group Inc. is a coincidental withdrawing from the medical insurance business, claiming inablity to see enough profit in the coverage it provides due to a vague ‘less profitablility’. However per their announcement:
CHANGING COVERAGE: Principal Financial Group Inc. will stop selling health insurance, and customers, as policies come up for renewal, will transfer to UnitedHealthcare. The phase-out of all policies is expected to take about three years.
WHY LEAVE BUSINESS: Principal has seen its asset management and 401(k) retirement businesses grow and become more profitable while its health insurance segment has shrunk, requiring more investment to remain competitive.
And per United Healthcare:
UnitedHealthcare today announced it has entered into an agreement to renew medical insurance coverage for The Principal Financial Group’s (The Principal®) medical plan customers as The Principal completes its plans to exit the medical insurance business. The Principal will continue to offer life insurance, dental, disability, vision and wellness programs.
The Principal selected UnitedHealthcare to provide an easy and attractive transition option for its customers to renew their health plans. The Principal currently covers customers in 31 markets nationwide, predominantly throughout the Central United States, where UnitedHealthcare offers an extensive network of physicians, hospitals and other health care providers.
Paying 10% of your annual gross (unadjusted) income (avg wage at McD is about $8/hour) for a plan that caps benefits at $10,000 isn’t health insurance by any reasonable definition of the term. (Let’s be nice and ignore the “barely covers a cold, a physical, blood tests and a doctor visit” version.)
If the firm is really both that inefficient (requires more than 20% of premium revenue to be spent on overhead) and that bad at negotiating benefits, haviing them get out of the market is a good thing.
Or, at least, something a capitalist would appreciate.
A good perspective of the Mac health plan vs the new healthcare law
Arizona Republic colunmist today wrote about a woman who has been battling cancer for several years and for a few years had a remission. A couple of years ago the cancer came back. She had since lost her job, her husband had left her, and she had no medical insurance following these events. Thus, no treatment and she was told get ready to die. She did.
You gotta love a country that does this to its citizens.
Lets call that what it is health care rationing, which we have by wealth and insurance.
An expansion of Medicaid makes more sense, with the feds picking up more of the funding.
Simply driving mini-meds out of business helps how?
Waivers will be granted. What’s the beef??