Safeway Inc.: Cutting Health Care Costs Through Prevention

In today's Wall Street Journal, the CEO of Safeway Inc., Steven A. Burd, puts forth his vision for reducing the nation's rising health care costs. By implementing a comprehensive employee wellness program, Safeway has kept costs level for four years--while other employers have seen their premiums increase by 38% over the same period.

Mr. Burd makes two key points. First, he argues that 70% of all health care costs are the result of behavior; and second, that 74% of all costs can be traced back to four chronic health conditions: cardiovascular disease, cancer, diabetes, and obesity. Many instances of these conditions are preventable.

He also underscores the importance of incentivizing good behavior. Safeway rewards employees who make the effort to be healthier by lowering their portion of health premiums. Federal law places caps on some of these incentives, and Mr. Burd argues that they should be raised.

If the entire country had followed Safeway's lead, we would have saved $550 billion since 2005, according to Mr. Burd's calculations. Let's hope Congress takes his advice and recognizes the potential of employee wellness programs.