How Safeway is Cutting Health-Care Costs

In today's Wall Street Journal, there is a great opinion article by the CEO of Safeways, Steven Burd. He contends that effective health-care reform must meet two objectives: 1) It must secure coverage for all Americans, and 2) it must dramitcally lower the cost of health care. He proceeds to explain how utilizing market-based solutions can ultimately reduce our nation's healthcare bill by 40%. At Safeway, he capitalized 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.

At Safeway, employees are tested for the four measures - tobacco usage, healthy weight, blood pressure and cholesterol levels- and receive premium discounts off a "base level" premium for each test they pass. Through its program, Safeway's obesity and smoking rates are roughly 70% of the national average and health-care costs for four years have been held constant.

To read the entire article, go to: http://online.wsj.com/article/SB124476804026308603.html