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Cutting Health Costs: Discounts For The Healthy?

Safeway CEO Steve Burd says the company's wellness incentive program has a high satisfaction rate among the 75 percent of workers enrolled.
Paul Sakuma
Safeway CEO Steve Burd says the company's wellness incentive program has a high satisfaction rate among the 75 percent of workers enrolled.

Amid the national debate over health care, one thing everyone can agree on is that costs can't keep rising. Five years ago, one company implemented a plan that it says has kept its health care spending from increasing. NPR spoke with the executive of grocery chain Safeway Inc. about the company's wellness incentive program.

CEO Steve Burd says employees receive a discount on their health insurance if their body mass index is below 30, the number over which people are considered obese.

"If it's above 30, that means they pay about $318 more than someone who is in the other camp," says Burd. "But the beauty of our plan is that if you make a reduction of, let's say 10 percent of your body mass index, we write you a check at the end of the year for making that progress."


Burd says the company also provides financial incentives to employees who make gains in quitting smoking, bringing hypertension under control and lowering cholesterol.

"In a recent survey of our employees," he says, "78 percent either rated it 'very good' or 'excellent.' "

On a per capita basis, Burd says, Safeway has kept its costs flat for the past five years. He argues that if similar programs were implemented across the nation, health care spending would be drastically reduced.

"It's a pretty simple formula. Very few companies have done it, for one reason or another, and you know, we're confident that the nation could adopt a similar formula if the legislation gets written correctly," says Burd. "And you could not only reverse the obesity trends, you can reverse the cost curve as well."

Critics of Burd's data say Safeway's health care savings have not been independently verified. In a Kaiser Health News report, a spokeswoman for Safeway acknowledged that there has been no independent analysis, but said, "We were able to see savings clearly and immediately the first year we implemented the program."


Are Plans A Form Of Discrimination?

Organizations like the American Heart Association and the American Cancer Society argue that a program that lets the healthy pay less for health care discriminates against those who may be less healthy for a variety of reasons, including pre-existing conditions or socioeconomic status.

Burd says the groups are a bit misguided.

"For example, the American Cancer Society has lined up against this kind of incentive; yet they support tobacco taxes because they say it raises the price of a cigarette and it deters people from smoking.

"In our particular case, when we have an elevated premium for a smoker, that premium goes into our health care fund with the ability to take care of that employee 10 to 15 years down the road, should they develop lung cancer."

The premium functions as a deterrent, he says, and is necessary to keep nonsmokers from paying the medical costs of smokers. As for Safeway's BMI incentive, Burd says that if the nation doesn't get obesity under control, it won't be able to cut costs on health care.

Tackling Obesity: A Key Health Factor

When asked about combating obesity in other ways — like not selling sugary cereals and putting them at kids' eye level, or backing a tax on junk food, sweets and certain kinds of fried food — Burd says Safeway wouldn't support it.

"America was built on the notion of free choice, and people are free to choose what they eat and whether or not they exercise," he says.

"All we would say, in Safeway, is that you should bear the consequences of those free-choice decisions that you make. So we don't want to restrict what people buy. I think that takes us in the wrong direction. Why shouldn't I be able to enjoy an occasional french fry as long as I know that I have to make a trade-off and burn those calories off?"

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