Safeway's Health Plan

In the recent presidential election we heard a lot about Obama's health plan. Candidate Obama was in favor of more government health care. And we heard about McCain's health plan. He was in favor of taxing health benefits above a certain threshold and allowing a national market in health insurance.

But we didn't hear too much about Safeway's health plan. And that is ridiculous. US retail, corporations like Safeway and Wal-Mart, are the world champions when it comes to retail productivity. They might have something to add to the national debate.

Well, now the CEO of Safeway, Steven A. Burd, has corrected the obvious omission. He has written an oped in the Wall Street Journal to tell us all about the Safeway health plan.

Based on the results of Safeway's Healthy Measures plan, Burd thinks that we can lower national health care costs by 40%.

At Safeway we believe that well-designed health-care reform, utilizing market-based solutions, can ultimately reduce our nation's health-care bill by 40%.

The magic bullet? Reward employees for healthy life styles.

Burd trots out the facts, which Safeway discovered in 2005.

1. 70% of all health-care costs are the direct result of behavior.
2. 74% of all costs are confined to four chronic conditions (cardiovascular disease, cancer, diabetes and obesity).
3. 80% of cardiovascular disease and diabetes is preventable
4. 60% of cancers are preventable
5. more than 90% of obesity is preventable.

Well, it is not exactly a surprise. We've been seeing o lot of facts like that recently. But never in quite such a bald statement.

So what is Safeway doing about it? It is rewarding its employees with discounts on their health care premiums if they pass healthy life-style tests.

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.

Wow. This seems pretty extreme. So what do the employees think about this? They like it and they want more of it.

When surveyed, 78% of our employees rated our plan good, very good or excellent. In addition, 76% asked for more financial incentives to reward healthy behaviors. We have heard from dozens of employees who lost weight, lowered their blood-pressure and cholesterol levels, and are enjoying better health because of this program. Many discovered for the first time that they have high blood pressure, and others have been told by their doctor that they have added years to their life.

The next challenge for Safeway is to get its unionized workforce to buy into this. Yep. The current system only applies to its non-union employees.