Posts Tagged ‘Healthy Measures program’

Do Corporate Healthcare Incentives Work?

Tuesday, January 11th, 2011

Healthcare insurance incentives are somewhat successful, according to the National Business Group on Health, which says approximately 68 percent of its members either offer their employees discounts on premiums if they quit smoking or start eating more healthfully or begin exercise programs.  The companies have a vested interest in these programs because they keep healthcare costs down and add up to fewer sick days.

The impetus for healthcare incentives is the Safeway Amendment that is one part of President Barack Obama’s healthcare reform legislation.  The amendment lets companies reimburse employees as much as 20 percent of their insurance premiums if they take part in wellness programs.  This percentage rises to 30 percent in 2014 and to 50 percent with special governmental approval.  The amendment is so named because of the support of Safeway CEO Steve Burd, who wrote an op-ed piece in the Wall Street Journal in 2009 about how his company’s Healthy Measures program proved that incentives can slash healthcare costs by as much as 40 percent.

According to Harald Schmidt, a health policy expert and Harkness Fellow at the Harvard School of Public Health, “In principle, I think wellness incentives are a good idea.  But it all depends on how they are implemented.  If the focus is on just reducing the cost of healthcare rather than improving health, then you may have a problem.  The second issue is, we must make sure everybody has a reasonable chance of benefiting from incentive programs.  We really have a problem if some find it much harder than others, and especially if we hold people responsible for things that are in fact beyond their control.”

Kevin Volpp, a physician and director of the Center for Health Incentives at the University of Pennsylvania School of Medicine, offers a slightly different perspective.  “The reality is that we have a healthcare financing system that pays to treat people once they are sick.  There’s a growing recognition that health behaviors are a major driver of premature mortality and healthcare costs.  We need to rigorously test approaches that can better align incentives for patients with other interests of the health system, such as employers and insurers, so that resources go to keep people healthy.  Wellness incentives are a piece of that and can be used in ways that provide positive feedback to patients.”

Safeway Creates a Proactive Healthcare Coverage Model

Thursday, September 3rd, 2009

Supermarket giant Safeway, Inc., takes a proactive approach to its healthcare coverage and is in the forefront of the movement toward reform, according to Steven A. Burd, CEO.

Safeway’s voluntary Healthy Measures program, in which 74 percent of the non-union workforce participates, lets employees receive premium discounts for every behavior test they pass.  Employees who pass all four tests have their annual premiums reduced $780 for individuals and $1,560 for families.safeway_cart

Burd, who also founded the Coalition to Advance Healthcare Reform, believes that well thought-out healthcare reform, using market-based solutions, will reduce the nation’s cost of coverage by 40 percent.  That is more than enough to provide coverage for the 47 million Americans who currently lack insurance.

According to Burd, “At Safeway, we are building a culture of health and fitness.  The key to achieving these savings is healthcare plans that reward healthy behavior.  As a self-insured employer, Safeway designed a plan in 2005 and has made improvements every year.  During this four-year period, we have kept our per capita healthcare costs flat (this includes both the employee and the employer portion), while most American companies’ costs have increased 38 percent.”

Safeway’s plan focuses on the fact that 70 percent of healthcare costs are the result of behavior, and that 74 percent of all costs are due to four chronic conditions – cardiovascular disease, cancer, diabetes and obesity.  The firm also learned that 80 percent of cardiovascular disease and diabetes, 60 percent of cancers and 90 percent of obesity are all preventable.

“As much as we would like to take credit for being a healthcare innovator, Safeway has done nothing more than borrow from the well-tested automobile insurance model,” Burd said.  “For decades, driving behavior has been correlated with accident risk and has therefore translated into premium differences among drivers.  Stated somewhat differently, the auto insurance industry has long recognized the role of personal responsibility.  As a result, bad behaviors (like speeding, tickets for failure to follow the rules of the road, and frequency of accidents) are considered when establishing insurance premiums.  Bad driver premiums are not subsidized by the good driver premiums.”