McDonald's May Drop Health Plan

Is this the future for America? It is speculated that McDonald's, the largest fast-food chain is planning to drop its health insurance coverage for its employees, according to the Wall Street Journal. McDonald's has denied this sensational claim, but the company did say that it wants to improve the company's health insurance options. This announcement of McDonald's dropping its health issuance has benefited the company. McDonald's' stock has increased by seven percent since mid-July.

If McDonald's does drop its health insurance then there will be approximately 30,000 restaurant workers that will either go on the government plan or buy their own insurance. McDonald's has disagreements with the federal regulator requirements. One of the requirements that has McDonald in a frenzy is called the minimum medical loss ratio. This requires the company to allocate a portion of its revenue received on premiums and spend it on benefits. Currently, McDonald's has limited benefits for its employees. These benefits do not meet the government standard, which mean in order for the company to comply, McDonald's would have to spend more. This could cause a downward slope for a fast-food chain like McDonald's. The company already spends approximately 80 to 85 percent of its net income on overhead cost. With the addition of health insurance, the company’s profits would surely decrease. However; there may be hope for the low-wage employers. The government is considering either a waiver or reducing requirements.

ALJ — Analysis

McDonald's is not the only company that is having a tough time embracing regulations for new health insurance.  Most people would say that employees need great benefits, which is easier said than done. Businesses are in business to make a profit! During rough times, businesses have to make tough decisions, which could entail laying off workers, eliminating raises and job positions. No one wants to see the reduction of jobs, but businesses have to think about their bottom-line, which result in satisfying investors.  

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