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McDonald's, U.S. clash over healthcare edict

The dispute involves a mandate that at least 80% of premiums go toward medical expenses. The fast-food giant says coverage for 30,000 workers will be too expensive and it may switch to another plan.

October 01, 2010|By Bruce Japsen

A dispute between McDonald's Corp. and the federal government over a new healthcare reform requirement is giving a peek into the potential complexities from the massive new law that companies will face.

The U.S. Department of Health and Human Services confirmed Thursday it has been in discussions with the Oak Brook, Ill., fast-food giant over regulations that will require health plans to spend at least 80% of premium revenue on medical costs.

And that's a sticking point for McDonald's, which worries the mandate involving medical-loss ratios, or the percentage of premium revenues that go toward medical services, will make an insurance plan for 30,000 workers at its franchise restaurants too expensive to continue. The Obama administration says the key tenet is designed to expand medical benefits and hold insurance companies to more rigorous standards.

Both McDonald's and the administration took issue with the accuracy of a published report on the dispute, saying the restaurant chain has no plans to drop health coverage for employees. But McDonald's said that it may have to replace its plan with another form of insurance.

bjapsen@tribune.com

Tribune staff writer Emily Bryson York contributed to this report.

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