Safeway’s Approach to Health Care Cost Containment

Published on July 28, 2009

Safeway Chairman and CEO Steven Burd wrote an op-ed article for the Wall Street Journal in June that has not received as much attention as it deserves.  Safeway is a self insured employer and had the flexibility to design a plan that has kept costs flat for the past four years in comparison to the 38% increase in costs that the typical plan experienced.

Safeway’s plan has incentive driven features that appear to account for the bulk of the cost control benefits.  The plan rewards employees who can prove that they are engaging in healthy behavior.  This is done by reducing premiums by up to $780 for individuals or $1,560 for families.  Employees share in the benefits of lifestyle changes such as quitting smoking through premium reductions.  Safeway’s smoking rate is now 70% of the national average.

In a CNBC interview yesterday, Mr. Burd describes the Safeway plan and weighs in on the health care reform debates currently underway in Congress.

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Disclosures:  None

Safeway’s Approach to Health Care Cost Containment
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