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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)

It would be difficult for premium incentives to drive overall trends for Safeway's workforce of about 200,000, because, according to company spokesman Brian Dowling, the program has been open to only 28,000 employees -- generally office workers rather than store personnel covered by union contracts. About 17,000 to 18,000 have enrolled.

(Burd's assertions about flatlining costs pertained to those workers eligible for Healthy Measures, as did the projected 8.5 percent increase for 2009.)

Safeway has taken steps to encourage cost savings and wellness, none of which required an act of Congress.

In 2006, it restructured its benefits to make employees more cost-conscious. Under the new structure, the company would pay the first $1,000 of a family's annual medical expenses, and the employee would generally be responsible for the next $1,000. It began covering 100 percent of the bill for preventive measures such as mammograms and colonoscopies. It paid people to complete health questionnaires, encouraged use of generic drugs and in 2008 increased the limit on employees' out-of-pocket expenses.

While expenses soared in other health plans -- by 30 percent over four years, according to Hewitt -- Safeway boasts that per capita expenses for its non-union employees were only 2 percent higher in 2009 than in 2005.

Any number of changes in the company's benefits plan might contribute to the explanation.

Burd and supporters of the Safeway Amendment have emphasized the premium incentives.

"The big difference between Safeway and most employers is that we have pronounced differences in premiums that reflect each covered member's behaviors," he wrote in the Wall Street Journal commentary.

Burd "actually emphasizes very strongly it isn't prevention that saved them money. It's incentivizing healthy behavior, and that's a huge difference. . . . Incentivizing somebody with a lower health-care premium to stop smoking or to lose weight or to control their cholesterol or things like that," Sen. John Ensign (R-Nev.), a sponsor of the Safeway Amendment, said in September, as the Finance Committee drafted its bill.

In a recent letter endorsing the Safeway Amendment, medical leaders including the Cleveland Clinic's chief executive said more research is needed on the effectiveness of such incentives. "However, we believe the lack of empirical third party data does not preclude moving forward," they wrote.

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Many Healthy Measures participants have now undergone their second annual round of wellness tests, and last week Safeway spokeswoman Teena Massingill said employees showed "pretty impressive" improvements.

According to company statistics, the proportion of employees classified as obese declined by five percentage points, while the proportion who were overweight declined by one percentage point. Meanwhile, 40 percent of workers and spouses who failed the blood pressure test in 2008 passed in 2009, 30 percent of former smokers registered as tobacco-free, and 17 percent who failed the cholesterol test in 2008 passed in 2009.

The financial ramifications remain unclear. In the short term, Safeway's program probably boosts medical expenses because the screenings prompt people to seek treatment for newly detected problems, Shachmut said.

In assessing the economic impact of incentives, it might be helpful to know how health-care expenses for employees in the voluntary Healthy Measures program compare with those for the rest of the Safeway workforce.

Shachmut declined to provide such information. "We frankly haven't been disclosing that," he said. And "I would just prefer not to." Pressed further, he said the data would not be available until April or later-- long after Congress and the president aim to enact a health-care bill.

"I promise you," he said, "we're as eager to know the answer to those questions as you are."


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