Misleading claims about Safeway wellness incentives shape health-care bill

President Obama discusses health care with chief executives Steven Burd of Safeway and Sally Jewell of REI. He has praised Burd's approach.
President Obama discusses health care with chief executives Steven Burd of Safeway and Sally Jewell of REI. He has praised Burd's approach. (Charles Dharapak/associated Press)

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By David S. Hilzenrath
Washington Post Staff Writer
Sunday, January 17, 2010

It's a seductively simple solution to rising health-care costs. Require workers to pay higher premiums if they flunk tests for measures such as weight, blood pressure and cholesterol. Then, bingo: You not only get a fitter workforce, you slash medical expenses.

Politicians of both parties have embraced that idea and expanded upon it in the Senate reform bill, inspired largely by the claims of Steven A. Burd, Safeway's chief executive. Burd says he has set an example for employers nationwide by rewarding employees for healthy behavior.

"Safeway designed just such a plan in 2005 and has made continuous improvements each year," Burd wrote in the Wall Street Journal. "The results have been remarkable," he declared, adding that "our health care costs for four years have been held constant."

If only that were true.

In a legislative debate filled with misconceptions, few rival the myth about Safeway, which has become the poster company for a provision that big employers and insurers covet. The supermarket chain's story shows how the untested claims of interest groups can take on a life of their own and shape national policy.

As the House and Senate work to meld their bills, the Senate's "Safeway Amendment," which would more than double the potential rewards and penalties tied to wellness tests, has become a point of contention.

Business groups have pushed for the increase, arguing that financial incentives encourage workers to take responsibility for their health. Opponents such as the American Heart Association and the American Cancer Society say the provision would undo a central element of reform -- the promise that people's insurance premiums would no longer be influenced by their health status.

Rewarding or penalizing people based on wellness tests may save money over the long run, but Safeway hasn't proved it. In the meantime, based on 2009 data, if the Safeway Amendment becomes law, American families with average health benefits could have $6,688 a year riding on blood tests and weigh-ins.

But a review of Safeway documents and interviews with company officials show that the company did not keep health-care costs flat for four years. Those costs did drop in 2006 -- by 12.5 percent. That was when the company overhauled its benefits, according to Safeway Senior Vice President Ken Shachmut.

The decline did not have anything to do with tying employees' premiums to test results. That element of Safeway's benefits plan was not implemented until 2009, Shachmut said.

After the 2006 drop, costs resumed their climb, he said.

Even as Burd claimed last year to have held costs flat, Safeway was forecasting that per capita expenses for its employees would rise by 8.5 percent in 2009. According to a survey of 1,700 health plans by the benefits consultant Hewitt Associates, the average increase nationally was 6.1 percent.


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