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McDonald's Fights Back Against Report It Will Drop Health Care Plan

Photo Courtesy - PRNewsFoto(NEW YORK) -- McDonald's and the Obama administration are firing back at a Wall Street Journal report saying the fast food giant is considering dropping its "mini-med" health insurance for hourly workers because of the new health care reform law.

"Media reports stating that we plan to drop health care coverage for our employees are completely false," said Steve Russell, a senior vice president and head of human resources for McDonald's, in a written response to the article. "These reports are purely speculative and misleading."

That sentiment was echoed by Health and Human Services Secretary Kathleen Sebelius Thursday.  "The McDonald's story is flat out wrong, and I am sorry that they were not more accurate in their reporting," she said.

Nearly 30,000 McDonald's employees currently participate in the plan, which provides a maximum of $2,000 to $10,000 a year in basic medical coverage at a cost of $14 to $32 a week, according to the company. Home Depot, Disney, Blockbuster, Staples and other big retail chains with large populations of hourly employees offer similar plans.

The Wall Street Journal reviewed a memo by McDonald's, asking federal officials to determine if their most basic health insurance plans can be exempted from the medical loss ratio requirements of the new health care law. The law requires that 80-85 percent of the premiums received go directly to patient care, not to other expenses like overhead, executive salaries or dividends for shareholders.

The McDonald's plan, according to the report, has higher overhead costs because it provides insurance to a highly transient population of hourly workers in its restaurants and would not likely meet the minimum requirements of the new law.

An HHS spokeswoman called the story premature.

"The new law provides significant flexibility to maintain coverage for workers. Additionally, this story is premature as guidance on the new medical loss ratio rules has not even been issued," said Jessica Santillo. "The administration is working closely with businesses like McDonald's that are committed to providing health benefits to protect health coverage for their employees."

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ABC News Radio