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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

National Association of Insurance Commissioners

Martin R. Wilson

Coalition to Advance Healthcare Reform

May 30, 2008

  • U. S. healthcare challenge
  • CAHR Background/Mission
  • CAHR Member Profile: Safeway
healthcare spending growth 4 0 times cpi








Healthcare Spending Growth – 4.0 Times CPI


4.0 X




Source: Centers for Medicare and Medicaid Services (CMS), Revolution Health, Safeway analysis

healthcare costs as percent of gdp

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
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
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
“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
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

  • U. S. healthcare challenge
  • CAHR Background/Mission
  • CAHR Member Profile: Safeway
core principles for healthcare reform
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
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
  • U. S. healthcare challenge
  • CAHR Background/Mission
  • CAHR Member Profile: Safeway
safeway healthcare expenses
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
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 driven by holistic approach
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
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