Obamacare denies Insurance
Research for Online Investors

by John Dalt

9/30/10

Just in time to fan more flames against Washington’s fix for our healthcare, McDonald’s has warned the Department of Health and Human Services they may drop health insurance for 30,000 hourly workers in the U.S. at the end of the year.

According to the Wall Street Journal, McDonald’s offers a “mini-med” plan to employees at 10,500 U.S. locations.  These mini-med plans are low cost ($14 per week) limited benefit plans that are expensive to administer because of high turnover of employees and claim processing costs.

McDonald’s mini-med plans have a $20 dollar co-pay for office visits, $5 dollar co-pay for generic prescription drugs, and cover 70% of inpatient hospital services.  Premiums are held down by placing a cap on annual benefits.

The high administration costs violate the Health-care bills provision that insurance companies pay out 85% of premiums collected in benefits.  Setting the ‘medical loss ratio’ (MLR) at 85% was an attempt to cut profits and executive bonuses at insurance companies by congress.

Over 1.4 million Americans are covered by similar mini-med plans.  Aetna Inc. offers mini-med plans to employees of Home Depot, Disney Worldwide, Staples, Blockbuster and CVS Caremark.  Aetna also provides mini-med insurance to AmeriCorps teaching-program sponsors.  These sponsors are required by federal law to make health coverage available.

The enrollment period for McDonald’s employees is in November.  If they do not receive a waiver to exceed the 85% MLR from HHS, they may withdraw the plan.

Other health insurance options under the Health Care bill will not be available until 2014, leaving over one million people without insurance, courtesy of the government!

Perhaps the best result of the health care bill is it will shut down AmeriCorps. because they cannot offer health insurance.

What other country in history can you think of that hired people to perform ‘community service?’

The last day of the month was greeted with a sharp sell-off this morning.  It looks as if the market wants to climb back to reclaim lost ground.  Now is not the time to regain your confidence in the market.  Be careful.

To the mailbag:
Good newsletter. You're never contentious; you're right!---subscriber G.C.

Please correct your grammar.  ‘Too’ means also, not ‘to.’--- gulch member L.

John’s reply:  I am sorry I was wrong with the use of ‘to’  I struggled with this but thought it fit as a "function of direction"  Your note made me realize this was incorrect after looking it up, again.  The meaning in context was ‘also.’  Did I ever tell you, I am a journalism major?  My writing professor would whack the back of my hand for that one!

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

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