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Sebelius: WSJ Report on McDonald's Health Insurance "Flat Out Wrong"

But neither Sebelius nor McDonald's officials have ruled out the possibility that the fast food giant will drop 30,000 employees' health plans.

11:43 AM, Sep 30, 2010 • By JOHN MCCORMACK
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Secretary of Health and Human Services Kathleen Sebelius says a report in the Wall Street Journal that McDonald's may drop its limited benefits health insurance plans for 30,000 workers is "flat out wrong." The Journal reported this morning:

"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. [...]

"Federal officials say there's no guarantee they can grant mini-med carriers a waiver. They say the answer may not come by November, when many employers require employees to sign up for the coming year's benefits."

Sebelius suggested that McDonald's may in fact get a waiver from HHS that would enable the fast-food giant to continue offering limited benefits plans to its employees. But neither Sebelius nor McDonald's officials have ruled out the possibility that the company would drop such insurance coverage, which is what the Journal claimed.

"The McDonald's story is flat out wrong," Sebelius said this morning at a breakfast meeting with reporters sponsored by the Christian Science Monitor (video here). "I’m sorry they weren’t more accurate in their reporting."

"The McDonald's H.R. director Steve Russell has put out a statement flatly denying the statement that they are considering withdrawing from the insurance market," Sebelius said. But Russell didn't say the company isn't "considering" dropping the "mini-med" plans. Russell merely said in a statement this morning that it's "false" to say "we plan to drop health care coverage for our employees." 

"These reports," Russell continued, "are purely speculative and misleading."

This morning, Sebelius outlined the two-step process by which McDonald's may get an exemption.

"One is a waiver about limits," Sebelius said. "We have that in our administrative authority. And McDonald's came into hhs and discussed that with our folks two weeks ago, and within 48 hours we approved their waiver."

But Sebelius explained it is too early to grant McDonald's the second waiver it may need to find it economically possible to continue offering these plans. "The medical loss ratio issue is one that isn't even settled," said Sebelius. "We do not have the report yet from National Association of Insurance Commissioners, which by law has to inform our regulations. We haven't written a reg., we can't waive the reg. that doesn't even exist. We have assured the folks at McDonald's and others that as soon as we have a regulation that has a process in it we will begin those discussions."

Update: Via Michelle Malkin, Avik Roy writes at Forbes:

Last Friday, the National Association of Insurance Commissioners—the association of the 50 state insurance commissioners—issued its draft guidelines for how insurers will need to calculate “medical-loss ratios,” or MLRs. [...]

Now that the NAIC has spoken, we have a good idea of how the final regulations will look. And the news is not good: the MLR regulations are likely to lead to a significant disruption of the health insurance market, with many insurers exiting the market, driving premiums up and choices down.

Read the full report here.

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