Chairman Rockefeller Probes McDonald's Health Care Plan

October 1, 2010

Chairman RockefellerWASHINGTON, D.C.—Senator John D. (Jay) Rockefeller IV, Chairman of the U.S. Senate Committee on Commerce, Science, and Transportation, sent a letter today to Scott Beacham, the President and Chief Executive of BCS Financial Corporation, asking for more information about the insurance products his company sells to McDonald’s hourly wage employees.

The letter comes on the heels of a recent Wall Street Journal story which reported that McDonald’s Corp. had warned federal regulators that it could drop its health insurance plan for nearly 30,000 hourly restaurant workers.

Chairman Rockefeller’s letter follows:

Dear Mr. Beacham:

According to a recent story in the Wall Street Journal, your company sells one or more health insurance products to hourly wage employees of McDonald’s restaurants. I am writing to request more information about these products.

According to the Journal story, McDonald’s recently wrote a memo to the Department of Health and Human Services (HHS) warning that your company would not be able to meet the new minimum loss ratio requirements that were part of the new Patient Protection and Affordable Care Act (ACA) law. This law requires insurers in the individual and small group markets to pay rebates if they spend less than 80% of their customers’ premium dollars on medical care; in the large group market, the minimum ratio is 85%. The purpose of this provision is to make sure that most of consumers’ insurance premiums are going to pay for medical care, not insurers’ administrative costs and profits.

If the information in the story is correct, your company is apparently spending a significantly lower percentage of McDonald’s employees’ health care premiums on their medical care than the benchmarks established in ACA. If this is the case, McDonald’s hourly wage workers are setting aside portions of their paychecks for an insurance product that may not be providing them a good value.

In addition to spending an insufficient portion of their premium dollars on medical care, the products BCS is selling to McDonald’s employees are not likely to protect them against the costs of a major health care episode. The $2,000 maximum annual coverage you apparently offer in your McDonald’s “Basic Plan” would not come close to covering the costs of hospital emergency services or the delivery of a child.

In order to help the Committee understand the costs and benefits of the insurance products you are selling to McDonald’s employees, I request the following information and documents:

1. Identify and describe the health insurance products BCS currently offers for sale to McDonald’s employees. This description should include the extent and limits of the coverage in each product, the time period employees must wait before the coverage goes into effect, the premiums McDonald’s employees pay for each product, and the co-payments, deductibles and other out-of-pocket costs McDonald’s employees pay under the terms of the products.

2. Provide copies of all materials and communications McDonald’s employees receive in connection to the marketing or purchase of BCS health insurance products, including all written disclosures of the products’ benefits, limitations, and costs, that McDonald’s employees receive both before and after they purchase the products.

3. Provide the number of McDonald’s employees who currently are covered by BCS health insurance products.

4. Describe the business arrangement under which McDonald’s allows BCS to sell health insurance products to McDonald’s employees.

5. For each of the last five calendar years, provide the following information:

  • the amount of premiums McDonald’s employees paid for coverage under BCS health insurance products;
  • the amount of all medical claims BCS has paid for health care services provided to McDonald’s employees;
  • the number of McDonald’s employees who were covered by BCS health insurance products at the end of each calendar year;
  • the number of McDonald’s employees covered by BCS products who made payment claims for health services;
  • the number of McDonald’s employees covered by BCS products who reached the products’ annual spending limits; and
  • the average time period McDonald’s employees were covered by BCS health insurance products before ending the coverage.

Please provide your response to the Committee by October 15, 2010. The Committee is requesting this information under the authority of Senate Rules XXV and XXVI. Enclosed with this letter is a document providing additional information about how to respond to this document request. 


John D. Rockefeller IV