Safeway's Health Plan

As lawmakers debate healthcare in Washington D.C., businesses across America are wondering how the promised legislation will affect their bottom lines. One CEO is charging into the debate.  He hopes that, rather than nationalize healthcare, Congress will consider what his company, Safeway Incorporated, has done to hold its per capita healthcare expenses flat over the past four years. This includes expenses for both employer and employee.  During the same time period, these costs for corporate America as a whole have risen forty percent. 

Safeway CEO Steve Burd has been to Capitol Hill several times this year to testify before members of Congress hoping to convince them not to tilt the system toward a government-funded option.  He says "...it is the market that reins in costs."  In 2005, Safeway implemented a two-part plan to contain the company's healthcare spending, which, prior to that time, was rising 10 percent per year:  For its non-union employees, Safeway now fully covers primary and preventative medical tests and doctor visits. Plus, the company deposits $1000 into a "health reimbursement account" for each employee.  After the first thousand has been spent, the second thousand dollars of care is the employee's responsibility. Employees pay 20 percent of remaining costs up to $4000.  Then, an insurance policy kicks in. 

The Wall Street Journal's Kim Strassel points out that employees treat that first thousand dollars ver-y carefully, since the next thousand will come out of their pockets. They're avoiding using the emergency room for routine care. They're comparison shopping, finding, for instance, that a colonoscopy performed near their California headquarters can cost anywhere from $700 to $7000 dollars. When people have 'skin in the game, they'll find ways to get good care at a fair price. 

 The second part of Safeway's plan is voluntary.  It draws on company research and the general understanding that 74 percent of all healthcare costs stem from four conditions -- cardiovascular disease, cancer, diabetes, and obesity.  Seventy percent of costs are the direct result of behavior.  To affect that, Safeway discounts employees' portions of insurance premiums based on their performance, and improvement, on four tests that measure tobacco usage, weight, blood pressure, and cholesterol levels.

 Steve Burd says the benefits from Safeway's Healthy Measures Program go beyond saving money. Employees like the financial incentives. But they also like losing weight and getting healthier. 

This is not  'Big Brother monitoring your cholesterol.  Kim Strassel's column applauds Mr. Burd's efforts to convince Congress to craft a healthcare plan that employs market forces.

Mr. Burd is concerned that some of his fellow CEO's think their companies  "...will escape costs by dumping healthcare on the government." He thinks many companies will find it in their best interest to foster a culture of health and fitness.  Lawmakers should devise a plan that allows them to do just that.