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Thursday, September 30, 2010

McDonalds' Health Plan: A Public Good?

The Affordable Health Care Act passed by Congress and signed by the President making it a law in March 2010. This law holds insurance companies accountable for their unwillingness to provide the customer with health insurance, lowers health care costs, guarantees more choice, as far as what health care plans the consumer wants, and enhances the quality of health care for all Americans. All Americans. Those who do not have it will be fined.

Today, I read an article called, “White House Pledges Flexibility on McDonald's Health Plan” in the Wall Street Journal. The article is about McDonalds, a well known fast food restaurant, warned federal regulators it could drop health insurance for all 30,000 workers unless they waive a new requirement on the new Health Care Act. The new requirement is called, “minimum medical loss ratio” which “concerns the percentage of revenue received from premiums that must be spent on benefits.” McDonalds and many other retailers and restaurant chains the offers a limited minimum medical benefit. Most of these plans do not meet a 2011 requirement that spend 80% to 85% premiums on medical benefits. “McDonald's last week sent a top official at the Department of Health and Human Services a memo saying "it would be economically prohibitive for our carrier to continue offering" its "mini-med" limited benefit plan unless it got an exemption from the requirement.”

A public good is non-excludable. The new health care law made health care non-excludable. Insurance companies cannot deny anyone from medical coverage that wants it. Also, the government made it affordable so everyone could get it. By McDonalds wanting to drop health coverage to their 30,000 employees says they are willing to cut their employees out of health care and they could be fined due to McDonalds, a world-wide known company, having a dispute with paying 80% to 85% premiums on medical benefits instead of overhead expenses.

Either way, the employees who have health coverage with McDonalds and other companies who offer a limited minimum medical benefit could be at risk of not having a good enough heath plan for the government. This requires waivers that the employees must have to make sure they do not get fined. They will still have health insurance, but the quality of it may be lower than what other Americans have. This is because in December the Department of Health and Human Services will make a decision about this requirement that McDonalds in unhappy with at the moment.

Health Care is a Public Good in America that everyone should have now. Still with this being such a big deal in the news for so long big companies do not recognize that employees depend on the health care plan that is provided to them by their companies, that is if their company does provide it. By a company taking their employees off of the Health Care Plan that is the same as excluding them from getting health care plan they want.

Sources:
Adamy, Janet. "White House Pledges Flexibility on McDonald's Health Plan." Wall Street Journal (2010).

Comments:
A good is not a "public good" as we define it in economics because government says it is.

A public good has two characteristics that are technical, these characteristics are not chosen. But, characteristics have to be present for us to know there will be a public good market failure.

Health care services as well as health care insurance are goods that are both rival and excludable. These things simply are not public goods as the terms is defined in economics.
 
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