Rising health care costs, are wellness programs the answer?

In response to rising health care costs, one of the nation’s largest grocery store chains is tackling obesity among its employees with a tough company health plan developed to help employees make positive behavior changes.

After taking a look at the numbers, Safeway CEO Steve Burd determined that obesity was at the root of a large chunk of the company’s health care costs. Obesity was a common factor among chronic conditions, including heart disease, diabetes and cancer, plaguing his company and causing increased health care costs.

To reduce obesity rates among his 200,000 employees, Burd developed a health care plan in 2005 that was focused on changing employee behavior to improve the company’s overall wellness.

"What is the revelation Safeway had two years ago that completely transformed our thinking? That 50 to 60 percent of all health care costs are driven by behavior," Burd, Safeway's CEO since 1993, said in an interview. "If you design a health care plan that rewards good behavior, you will drive costs down."

Over the past three years, Safeway has been successful in their wellness efforts, with overall health care costs only increasing by half a percentage point. Most businesses have seen about a 16% increase in family premiums during the same time period.

In 2006, one year after the plan was put in place, the company reported that health care coverage costs for employees enrolled in the new plan fell 11%.


How the plan works

Safeway employees are put through a series of tests each year to measure body mass index (BMI), blood pressure, cholesterol and if the employee smokes.

The difference in premiums between employees who are not overweight and are non-smokers and those who are is about $1,500, with employees paying the difference.

If employees manage to lose 10% of their body weight and quit smoking, Safeway will reimburse employees for the difference at the end of the year.

Employees aren’t expected to accomplish the challenge on their own and Safeway has set up help along the way. Insurance pays for preventative health care services including annual physicals and well child check ups. The company also pays for smoking cessation programs, nutrition counseling and gym memberships.

To test his plan, Burd invited 30 large, self-insured businesses to replicate the Safeway wellness model. He also brought his plan to Capitol hill with Oregon Sen. Ron Wyden, promoting the Healthy Americans Act.


What’s your opinion on Safeway’s employee wellness plan? Is it the right way to reduce health care costs or do you think it’s going too far?