Earlier today, Charlotte noted reports that McDonald’s is considering dropping health care coverage for its hourly workers. Now we are being reassured that McDonald’s is in talks with the Administration to obtain waivers from certain requirements created by the new law so that it will be able to continue offering its coverage.
Jonathan Cohn of the New Republic defense of Obamacare, and his explanation fr why we shouldn’t be concerned about this whole McDonald’s incident, is revealing.
The administration is saying much the same thing–that it’s aware of the issue, has been talking to industry representatives, and has already made clear these plans will be exempt from some of the early regulations on insurance.
More important, the administration has yet to finalize the rule about how insurance companies spend their money (or what is known as the “Medical Loss Ratio”.) It’s entirely possible the administration will phase in the requirement slowly. Most likely, then, McDonald’s employees who like these plans will get to keep buying them, at least for the immediate future.
How nice. Maybe, just maybe, the folks in charge with deciding the rules that will micromanage the health insurance sector will decide that McDonald’s current offering is a-ok. Of course, maybe not. Maybe the Administration will decide to absolve the fast food giant from having to comply with some of the most onerous regulations. That may be a comfort to powerful, politically-connected corporation, but it does little for all the small and medium-size businesses that will be hit with these regulations and new costs. It also confirms just how arbitrary this whole process is.
Cohn then moves to detail how substandard the McDonald’s health insurance policies are anyway, writing:
…the policies in question are so-called mini-med plans with very limited benefits. In the case of McDonald’s, according to the Journal, there are two options: Employees who go with the minimum plan pay $14 a week for a policy that won’t cover more than $2,000 in medical bills a year. Employees who opt for the “generous” option pay about $32 a week for a policy that maxes out at $10,000.
To call that “insurance” is to distort the definition, since these policies would do very little to help people with even moderately serious medical conditions. (You can blow through $10,000 in medical care with one emergency room visit.)
Cohn is correct that this type of policy doesn’t meet the standard definition of insurance. Classically understood, insurance is supposed to be a contract in which you pay a fee to protect yourself against the full costs of negative, unlikely event. For example, you pay automobile insurance companies to help you cover your expenses from a major wreck, not expected trips to the mechanics.
The problem for Cohn is that the new health care law is even more of a perversion of the concept of “insurance.” Requiring that all insurance policies provide cost-free preventative medicine (as does the new law) isn’t insurance – it’s using a third party to pay for expected expenses.
Health insurance really should focus on providing protection in case you contract a serious medical condition, and we should all pay for routine medical expenses (check ups, the occasion trip to the doctor for the flu, etc.) ourselves. But Obamacare moves in the opposite direction, outlawing these types of high-deductible insurance policies.
Cohn closes happily noting that soon these workers will have better insurance options because of Obamacare. Unfortunately, because of all the new costs the law creates for businesses, many of them are just not likely to have jobs.