Safeway's Employees Take Responsibility
The Safeway grocery store chain created its own health plan for its employees. That's not unique -- many employers do that. Over the past four years, the average U.S. company has seen per-capita health care costs rise by 38%. Over the past four years, Safeway's per-capita health care costs have remained flat. That's a tremendous accomplishment and a great competitive advantage.
They did it by giving their employees responsibility over their own health and their own healthcare costs.
Safeway's plan capitalizes on two key insights gained in 2005. The first is that 70% of all health-care costs are the direct result of behavior. The second insight, which is well understood by the providers of health care, is that 74% of all costs are confined to four chronic conditions (cardiovascular disease, cancer, diabetes and obesity). Furthermore, 80% of cardiovascular disease and diabetes is preventable, 60% of cancers are preventable, and more than 90% of obesity is preventable.
... As with most employers, Safeway's employees pay a portion of their own health care through premiums, co-pays and deductibles. The big difference between Safeway and most employers is that we have pronounced differences in premiums that reflect each covered member's behaviors. Our plan utilizes a provision in the 1996 Health Insurance Portability and Accountability Act that permits employers to differentiate premiums based on behaviors. Currently we are focused on tobacco usage, healthy weight, blood pressure and cholesterol levels.
Safeway's Healthy Measures program is completely voluntary and currently covers 74% of the insured nonunion work force. Employees are tested for the four measures cited above and receive premium discounts off a "base level" premium for each test they pass. Data is collected by outside parties and not shared with company management. If they pass all four tests, annual premiums are reduced $780 for individuals and $1,560 for families. Should they fail any or all tests, they can be tested again in 12 months. If they pass or have made appropriate progress on something like obesity, the company provides a refund equal to the premium differences established at the beginning of the plan year.
Not only have these incentives saved employees a lot of money, they've also dramatically improved employee health.
Our obesity and smoking rates are roughly 70% of the national average and our health-care costs for four years have been held constant. When surveyed, 78% of our employees rated our plan good, very good or excellent.
Safeway would like to make their program even better. But the Federal government won't let them.
Today, we are constrained by current laws from increasing these incentives. We reward plan members $312 per year for not using tobacco, yet the annual cost of insuring a tobacco user is $1,400. Reform legislation needs to raise the federal legal limits so that incentives can better match the true incremental benefit of not engaging in these unhealthy behaviors. If these limits are appropriately increased, I am confident Safeway's per capita health-care costs will decline for at least another five years as our work force becomes healthier.
That's reform that won't cost taxpayers anything. That's reform that will actually "bend the cost curve" and reduce the cost of insurance. That's reform that will improve health not just finances.
Why isn't Washington working on that kind of reform? Why does Washington prevent insurance companies and employers from offering more of those incentives?
This entry was tagged. Healthcare Policy Reform Responsibility