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Safeway Chief on Wellness, CDHP Crusade

September 27, 2006
Related Topics: Benefit Design and Communication, Health and Wellness, Latest News
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Safeway Inc. CEO Steve Burd may not be the first executive to start practicing the religion of health care consumerism and wellness. He does, however, seek to be one of the chief proselytizers for the trends.

Since implementing a consumer-directed health care plan in January, Burd, whose Pleasanton, California-based supermarket chain employs 200,000 people and operates 1,770 stores in North America, says health expenditures have dropped precipitously for the food and drug retailer.

A market prescription, Burd says, also is the remedy to the national health care challenge. In a presentation at the U.S. Chamber of Commerce in early September, he outlined a four-step pro­cess: encourage healthy living, reduce wasteful medical spending, limit administrative expenses and lower the costs of terminal care.

Burd asserted that taking these steps would save about $500 billion annually in health care costs. He says those gains could be put toward extending insurance to the approximately 45 million Americans who lack coverage.

Promoting wellness is the key. "That’s where the money is," Burd says. "When we discovered this behavioral stuff, I felt like it was the Holy Grail."

Although he doesn’t anticipate Congress will tackle major health care legislation before 2008, Burd is trying to get his message to Capitol Hill now. He and other executives from pharmaceutical, health care and insurance companies have formed a group that is formulating a health care proposal.

For now, they’re floating their ideas to state and national legislators. "We’re talking to anyone who will listen," Burd says. "When I talk to members of Congress, I talk about the component pieces and what ought to be in there."

The group is not hawking a specific plan. But the principles it advocates include an individual mandate for basic health coverage based on the automobile liability insurance model, universal access to insurance and integrated medical, pharmaceutical and care management.

The system would be run by the private sector rather than the government and would rely on individual incentives to save money fostered by price and quality transparency. "What’s lacking (currently) is a market mechanism," Burd says. "The market is a wonderful way to solve this health care problem."

In the time it has remaining this fall, Congress is likely to focus on targeted health care legislation. Senate Majority Leader Bill Frist, R-Tennessee, is pushing for a House-Senate agreement on a bill to strengthen health care information technology.

"It can transform health care in terms of cost, quality and access," Frist says.

Burd urged companies not to wait for Washington, but to go ahead with their own initiatives. He maintains that Safeway’s consumer plan has produced an 11 percent drop in health care costs this year.

Nearly 43 percent of Safeway’s 30,000 nonunion employees have signed up for consumer-directed health care. Burd says that deductibles for individual employees have risen $250 annually, but their out-of-pocket expenses have fallen 20 percent because the company has picked up more of the total health care bill.

Mark Schoeff Jr.

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