Editorial: Cut Health Care Costs by Encouraging Healthy Behavior
Back in 2005, the supermarket chain Safeway (along with undoubtedly hundreds of other employers) was brainstorming ways to reduce the company's health care costs. The chain proceeded to implement a unique method for doing so - by providing its employees with financial incentives to practice healthy behavior.
According to a recent Wall Street Journal editorial authored by Safeway CEO Steven A. Burd, the plan has been a success and the supermarket giant has managed to keep its healthcare costs steady (while most American companies' costs have increased 38 percent in the same four years.) Specifically, the Safeway health care model relies on a provision in the 1996 Health Care Portability and Accountability Act (HIPAA) that permits employers to differentiate premiums based on behaviors.
The plan works as follows: Safeway's employees pay a portion of their own health care through premiums, co-pays and deductibles. Employees are tested on four chronic conditions which regularly attribute to increased health care costs - tobacco usage, healthy weight, blood pressure and cholesterol levels. (The testing program is voluntary and data is collected by outside parties, and not shared with company management.) If employees pass all four tests, annual premiums are reduced $780 for individuals and $1,560 for families.
The success of Safeway's health care savings program, while inspiring, is not suprising - a report issued last year by Pricewaterhouse Coopers revealed that $300 billion of the nation's health care funds are spent combating "behaviorial waste" such as obesity and non-adherence to medical regiments generally.
Employers who wish to use similar programs should take care that cost-cutting measures are implemented by rewarding employees for healthy behavior, as opposed to punishing employees for non-healthy behavior, as the latter may cause legal problems. For additional information, contact an experienced employment law attorney.
