The Beginning of the End of Employer-based Health Care?
Health reform has, thus far, produced several unintended consequences. As a result, legislators are scrambling to stave off more public backlash. The recent wave of exemptions granted by Congress to major corporations like McDonalds and Home Depot may only be a postponement of what appears to be an intended consequence of health insurance reform. The corporations argue that the new requirements may force them to drop insurance coverage for thousands of low wage workers.
If these companies ultimately cease providing what is called "mini-med" coverage, also known as limited benefit plans, then tens of thousands of workers will be absorbed by the new Medicaid exchanges set to open in 2014 – well after the next presidential election.
New Ratio Unrealistic to Meet for Limited Benefit Insurance Plans
At issue for these companies is the new medical loss ratio that requires companies to spend at least 80% to 85% of their premium dollars on actual medical benefits, which is the law's way of ensuring that employer-sponsored health plans limit the amount of money spent on high executive salaries and administrative costs. The ratio for mini-med plans is skewed towards administrative costs because of the high turnover of low-wage workers and the fact that there is low amount of actual claim expenses. In fact, the average amount of benefits claimed by McDonalds' workers is about $5,000 per year. For $13 a week, a McDonalds' employee can receive a maximum of $2,000 in benefits, which covers 100% of most medical costs except in-patient services, according to Time Magazine. At the higher end, $32 provides $10,000 of benefits.
For Some, the Only Mini-Med Insurance Alternative Is Three Years Off
Health insurance reform advocates argue that minimum-wage workers who are covered under these limited benefit plans will be better off with coverage provided through the Medicaid exchanges, specifically because it won't cost them anything and they won't have the annual coverage limits. They see this as a win for low-wage workers, and it would certainly be a win for proponents of health care reform as well.
Congress has acquiesced to the requests by McDonalds and other major corporations that they be exempt from these requirements by agreeing to a one-year waiver through 2011. That is still three years short of the opening of the insurance exchanges which would provide the only alternative for these workers. Should these companies be forced to drop their limited-benefit insurance plans, nearly 1.5 million workers could be in jeopardy of going without coverage for several years. One would think that the current administration would not allow that to happen, especially before the 2012 election.