Safeway and Health Care

The CEO of Safeway has been writing op-ed pieces and testifying before Congress. But Steven Burd hasn't been talking about how to run grocery stores. He has been educating anyone who will listen about how to cut health care costs.

Health care spending has been increasing faster than just about any other area of consumer spending. So when the CEO of a major company explains how using Safeway's model we could cut the national health care bill by 40 percent, we should listen.

The model that Safeway uses capitalizes on two key insights. First is the realization that 70 percent of all health care costs are a direct result of behavior. Second, nearly three fourths of all costs are confined to four chronic conditions (cardiovascular disease, cancer, diabetes, and obesity).

A high percentage of these diseases and conditions are preventable. So their model is similar to auto insurance premiums in which driving behavior and accident risk determine the cost of premiums.

Employees are tested for the four conditions and receive premium discounts for each test they pass. If they pass all four tests their premium is reduced substantially. "Should they fail any or all tests, they can be tested again in 12 months. If they pass or have made significant progress on something like obesity, the company provides a refund equal to the premium differences established at the beginning of the plan year."

Steven Burd says that this program has built a culture of health and fitness at Safeway. For example, their obesity and smoking rates are roughly at 70 percent of the national average. And most of the employees rate the health care plan as good, very good, or excellent.

These four chronic conditions are not entirely due to behavior, but doesn't it make sense to create incentives to change behaviors that are a direct result of behavior? While we are debating health care reform, why not focus needed attention on personal responsibility with financial incentives. I'm Kerby Anderson, and that's my point of view.