Senators put McDonald’s feet to the fire on health insurance for hourly workers
Members of a U.S. Senate panel grilled a McDonald’s Corp. executive Dec. 1 about the limited-benefit health insurance plans served up to the restaurant chain’s hourly employees.
McDonald’s provides so-called “mini-med” coverage to nearly 30,000 hourly workers at about 14,000 restaurants across the country. They are among the roughly 1 million Americans, typically low wage earners, who rely on mini-med health insurance. This coverage offers low insurance premiums but limited benefits.
Testifying before the Democrat-controlled U.S. Senate Committee on Commerce, Science and Transportation, McDonald’s executive Rich Floersch said the company contributes 10 percent to 20 percent of the premium costs for hourly employees on mini-med plans. Benefits under McDonald’s mini-med plans top out at $25,000 a year. Meanwhile, McDonald’s chips in 70 percent of the premium costs for white-collar workers and restaurant managers on the company’s comprehensive health plan, which boasts unlimited annual benefits.
That disparity didn’t sit well with one of the committee members, U.S. Sen. Barbara Boxer, D-Calif.
“That just makes my heart beat fast,” Boxer said, “and not in a good way.”
McDonald’s and other proponents of mini-meds laud the plans’ affordability for low-income workers who normally wouldn’t enjoy access to even the most basic health benefits, such as routine physician visits or discounted prescription drugs.
“We have worked hard to find affordable health insurance plans that meet the needs of our restaurant employees,” said Floersch, executive vice president of human resources at McDonald’s. “We believe that we have achieved the best result that the marketplace allows.”
At the hearing, several consumer and policy experts said mini-meds lack adequate coverage for people with serious illnesses or catastrophic injuries. Cigna Inc. and Aetna Corp. are the top U.S. health insurers for mini-med plans.
“These policies give people a false sense of security — they let them think they have health insurance when they really don’t,” said U.S. Sen. Jay Rockefeller, D-W.Va., chairman of the Committee on Commerce, Science and Transportation. “By the time they realize they don’t have real health insurance, it’s too late. They have already received a huge hospital bill or have had their testing or surgery canceled because their so-called health insurance is worthless.”
Floersch acknowledged that paid mini-med benefits for McDonald’s hourly employees are low. Yet he noted that about 90 percent of hourly employees don’t reach the annual cap for their health insurance deductibles.
“If you are serious about health insurance — and let’s compare it to a car — then are you comfortable with the fact that the brakes work only 90 percent of the time?” Rockefeller told Floersch. “The 10 percent that need it, need it and if you are a corporation and you provide health insurance, you can’t treat the 90 percent different than the 10 percent. The brakes have to work all the time or you won’t drive your car.”
Premiums for someone with a mini-med plan can range from $250 to $2,500 a year, or $1,000 to $6,000 a year for family coverage. Annual benefits range from $2,000 to $25,000.
Floersch told the panel that a McDonald’s hourly employee can choose one of three mini-med plans, whose annual premiums range from $710 (about $14 a week) to $1,947 ($37 a week). The annual benefit cap for McDonald’s mini-med plans range from $2,000 to $10,000, although most hourly employees subscribe to the plan providing the lowest annual amount of benefits, Floersch said.
McDonald’s does offer a higher-cost comprehensive health insurance plan to hourly workers, Floersch pointed out, but many of those employees can’t afford the higher premiums.
In 2014, limited-coverage mini-meds will disappear, as the federal health care reform law will prohibit health insurance plans from setting annual ceilings on benefits. In the meantime, some mini-med insurers have sought federal waivers that would let them bypass new restrictions on how much money health insurers can spend on administrative costs versus patient care. Some companies that have sought these waivers say the high administrative expenses tied to covering hourly employees under mini-med plans would make it difficult to meet the new spending standards.