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National Association of Insurance Commissioners. Martin R. Wilson Coalition to Advance Healthcare Reform. May 30, 2008. Agenda. U. S. healthcare challenge CAHR Background/Mission CAHR Member Profile: Safeway. Index. 2500. 2000. 1500. 1000. 500. 0.
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National Association of Insurance Commissioners Martin R. Wilson Coalition to Advance Healthcare Reform May 30, 2008
Agenda • U. S. healthcare challenge • CAHR Background/Mission • CAHR Member Profile: Safeway
Index 2500 2000 1500 1000 500 0 Healthcare Spending Growth – 4.0 Times CPI 2,180 4.0 X NHE 540 CPI Source: Centers for Medicare and Medicaid Services (CMS), Revolution Health, Safeway analysis
Business as Usual + 8.2% Flat 0% Healthcare Costs as Percent of GDP Healthcare Annual Cost Growth Scenarios 1970 Level = 7.2% Source: Safeway analysis
Root Causes of Escalating Healthcare Costs • Too many consumers (47 million) are not part of the system • Heavily insured workers often treat healthcare as a “free good” • Cost and quality transparency is largely absent • Insurance policies generally lack incentives to reward good or penalize bad behavior…yet 70% of healthcare costs are behavior driven • Providers of healthcare have little incentive to be cost conscious…paid for services delivered, not results
This is a Very Solvable Problem • 70% of healthcare costs are driven by behavior • 74% of all costs are confined to four chronic conditions • Every private sector company can experience per capita cost declines without cost-shifting or government help • By setting the example…the private sector can effectively drive the policy solution for the nation
“Big Four” Chronic Conditions Dominate Costs Cost Distribution by Disease State - 2005 74% of Total Costs 80% 40% / 60% 80%Nearly all Heart Type 2 can improvedisease / Stroke % Preventable / Manageable Source: CDC, HHS
Value of Cost Transparency 10:1 3:1 4:1 2:1 High Cost : Low Cost Multiple Source: New Hampshire Insurance Department; Safeway surveys and analysis
Agenda • U. S. healthcare challenge • CAHR Background/Mission • CAHR Member Profile: Safeway
Core Principles for Healthcare Reform • Market-based healthcare system • Universal coverage with individual responsibility • Financial assistance for low income • Healthier behavior and incentives • Equal tax treatment
CAHR’s Focus • Engage Presidential candidates and Congressional leaders to develop solutions • Advocate for CAHR principles and hold policy forums and discussions with federal and state policymakers • Bring key business leaders together with policymakers to highlight successful business models • Proactively engage media to advance CAHR principles and highlight business successes
Agenda • U. S. healthcare challenge • CAHR Background/Mission • CAHR Member Profile: Safeway
Safeway Healthcare Expenses* Index 2005 = 100 Business As Usual New SWY Plan * Non Union Employees moving to new SWY plan from former PPO plan
Key Features of a Health Plan That Works • Individual responsibility; rewards for healthier behavior • Preventive care covered at 100% • Health Risk Questionnaire – to establish baseline • Proactive care management based on individual needs • 24-hour information line and health advisor • Wellness and lifestyle management programs
Employee Acceptance Drivenby Holistic Approach • Strong incentives for healthy behaviors • Corporate Fitness Center and discounted fitness club memberships geographically • Organized wellness teams – friendly competition • Subsidies for healthy meals at company cafeteria • Soon to launch CareConnect service for cancer and cardiovascular disease for employees and family
Evolution of Healthcare at Safeway • Commitment to market forces and incentives to motivate healthy behavior in our healthcare plans • Continual improvement in plan and incentive design • Basics in 2006 • 20+ improvements in 2007 & 2008 • Additional improvements coming annually • Holistic program designed to improve health, wellness and engagement of entire Safeway family • Employee and family • Non-union and union • Customers • Opportunities remain with changes in government policy