Tuesday, June 16, 2009

A Different (Safe)Way

Steven A. Burd, the CEO of Safeway, Inc., has a brilliant piece dated June 12, on WSJ.com. Burd talks about great strides made in Safeway's health care practices that have not only held their costs flat for both employer and employee, but have also given financial incentive for a significant and measurable increase in employee health.

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 key to achieving these savings is health-care plans that reward healthy behavior. As a self-insured employer, Safeway designed just such a plan in 2005 and has made continuous improvements each year. The results have been remarkable. During this four-year period, we have kept our per capita health-care costs flat (that includes both the employee and the employer portion), while most American companies' costs have increased 38% over the same four years.


I'm reminded of the model that the auto insurance industry uses. It simply boils down to the fact that poor drivers aren't subsidized by the better ones. You get speeding tickets? You're accident prone? You're just young and dumb? You pay more.

Although not all risk factors are necessarily behavior-based, Safeway takes this into account by providing refunds, on an annual basis, to those that improve in any of the risk factors they regularly test for.

The most important thing about to remember about this system is that it puts to lie the notion that government intervention is necessary. Steven Burd may end up being a target, but this is true health care reform that preserves the freedom that every right-thinking American should cherish.

While comprehensive health-care reform needs to address a number of other key issues, we believe that personal responsibility and financial incentives are the path to a healthier America. By our calculation, if the nation had adopted our approach in 2005, the nation's direct health-care bill would be $550 billion less than it is today. This is almost four times the $150 billion that most experts estimate to be the cost of covering today's 47 million uninsured. The implication is that we can achieve health-care reform with universal coverage and declining per capita health-care costs.


I believe that when it comes to health care, Steven Burd is a true American patriot. Do any of our congressweasels have the spine to follow in his footsteps?

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