Last week, my syndicated column gave a brief, brutish history of Obamacare inquistions.
The column ended with this warning:
Sebelius’ threat last week against individual market health insurers who raise rates to cope with new federal coverage mandates will be far from this desperate administration’s last.
As health costs skyrocket, doctors abandon the profession, hospitals lay off workers and private insurers shut down, the only way to quell the Obamacare backlash will be through an even more thuggish campaign to demonize, marginalize and silence nationwide dissent.
Well, this morning, the WSJ brings the grim, completely expected news that fast-food giant McDonald’s has notified the feds that it may be forced to drop health insurance for some 30,000 workers due to the Obamacare mandate:
McDonald’s Corp. has warned federal regulators that it could drop its health insurance plan for nearly 30,000 hourly restaurant workers unless regulators waive a new requirement of the U.S. health overhaul.
The move is one of the clearest indications that new rules may disrupt workers’ health plans as the law ripples through the real world.
Trade groups representing restaurants and retailers say low-wage employers might halt their coverage if the government doesn’t loosen a requirement for “mini-med” plans, which offer limited benefits to some 1.4 million Americans.
The requirement concerns the percentage of premiums that must be spent on benefits.
While many restaurants don’t offer health coverage, McDonald’s provides mini-med plans for workers at 10,500 U.S. locations, most of them franchised. A single worker can 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.
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.
McDonald’s and trade groups say the percentage, called a medical loss ratio, is unrealistic for mini-med plans because of high administrative costs owing to frequent worker turnover, combined with relatively low spending on claims.
This Obamacare havoc is the unintended consequence of Democrat attempts to control insurer spending on executive salaries, marketing and other costs.
McDonald’s is the tip of the iceberg. Many other major companies that offer mini-med plans will also be affected, including Home Depot Inc., Disney Worldwide Services, CVS Caremark Corp., Staples Inc. and Blockbuster Inc. And the feds may not make a decision until it’s too late. The WSJ points out that many companies’ deadlines for signing up employees to benefit plans arrive in November.
What fresh demonization, reeducation, or inquisition plan will the White House peddle now in response to this latest inconvenient truth about Obamacare’s toll?
Update Instant damage control: McD’s denies the story.
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. The wonkiest among you will recall that the medical loss ratio is loosely defined as the dollar amount that an insurer spends on the health care of its beneficiaries, divided by the total dollar amount the insurer collects in premiums. Section 2718 of our new health care law mandates that insurance plans sold to individuals and small employers must spend at least 80 percent of their premiums on health care, and plans sold to large employers must spend at least 85 percent.
But, like everything else with Obamacare, the devil is in the details: how do you define health care? How do you define “insurance plan”? 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.
And this isn’t just my opinion. Maine Superintendent of Insurance Mila Kofman wrote a letter to HHS Secretary Kathleen Sebelius, asking Sebelius to waive the MLR rules for Maine until 2014. “One insurer has indicated its intent to pull out of individual markets (and has explicitly named one state where that decision has already been made),” wrote Kofman. “Prior to 2014, implementation of an 80% medical loss ratio requirement may destabilize the individual health insurance market in Maine.” Maine currently has a state MLR requirement of 65 percent; eliminating 15 percent of an insurer’s budget in three months is no small task.
Susan Voss, Iowa’s Commissioner of Insurance, has also asked Sebelius for a waiver. “Our first goal as insurance regulators is to protect consumers,” wrote Voss. “Part of that protection is providing ‘choice’ in the market place. Without some form of ‘phase-in’ for these individual carriers, consumers in Iowa will be left with fewer choices.”
Fewer choices, not more.
Update: Torquemada Sebelius tightens the screws and slams the WSJ, via John McCormack at The Weekly Standard.
Update: Awww! Torquemada Sebelius doesn’t like being called a thug.