Thursday, August 27, 2009

Supermarket Health Care Revolution

From town hall protests to prime time presidential broadcasts, the health care debate is in full swing. It's not just politicians and protesters weighing in on the matter but private employers as well. You've got health insurers, doctors, unions, you name it. One surprising source for health care proposals has been grocery stores.

Recently, Whole Foods CEO John Mackey offered up The Whole Foods Alternative to ObamaCare in the Wall Street Journal. The op-ed advocates largely free-market health care policy reforms. As this is not a policy blog (and certainly not a political blog) I will simply point out what Whole Foods is doing as an employer.

First, Whole Foods allows its "team members to vote on what benefits they most want the company to fund." Mackey also explains that Whole Foods pays 100% of the premiums on high-deductible health insurance plans. The piece inadvertently offered up a warning for employers: Be careful picking sides in a hotly contested policy debate! A boycott effort is underway and a Facebook group with more than 30,000 members has formed to protest Mackey's op-ed.

While Whole Foods focused on policy proposals, Safeway CEO Steven Burd focused on his company's own policies in a WSJ op-ed, How Safeway is Cutting Health Care Costs. This piece likewise advocated market-based solutions but in the form of employment practices (though it too is framed as a policy-advocation piece).

Safeway based its model off of automobile insurance. The basic premise is that there are "good" behaviors and "bad" behaviors. In auto-insurance its things such as tickets and accidents; in health insurance its things such as fitness and diet. The op-ed describes Safeway's plan in more detail but basically there's a base rate and employees get deductions for hitting certain targets.

The results? Safeway's health care costs have remained flat in the last four years and "that includes both the employee and the employer portion... while most American companies' costs have increased 38% over the same four years." Safeway's success has not been limited to money, Burd boasts that his workers are healthier than average and happy with their coverage. Happier and healthier workers are more productive and that's a win-win for everybody.

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