National Association of Insurance Commissioners
Martin R. Wilson
Coalition to Advance Healthcare Reform
May 30, 2008
2HC Cleveland Clinic 05-27-08
Agenda
U. S. healthcare challenge
CAHR Background/Mission
CAHR Member Profile: Safeway
3HC Cleveland Clinic 05-27-08
Index
0
500
1000
1500
2000
2500
Healthcare Spending Growth – 4.0 Times CPI
2,180
540
4.0 X
NHE
CPI
Source: Centers for Medicare and Medicaid Services (CMS), Revolution Health, Safeway analysis
4HC Cleveland Clinic 05-27-08
Healthcare Costs as Percent of GDP
0%
5%
10%
15%
20%
25%
30%
1970 1980 1990 2000 2005 2010 2015 2020
Source: Safeway analysis
1970 Level = 7.2%
Business as Usual + 8.2% Flat 0%
Healthcare Annual Cost Growth Scenarios
5HC Cleveland Clinic 05-27-08
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
6HC Cleveland Clinic 05-27-08
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
7HC Cleveland Clinic 05-27-08
Source: CDC, HHS
% Preventable / Manageable
“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 improve
disease / Stroke
8HC Cleveland Clinic 05-27-08
Value of Cost Transparency
$634
$6,800 $6,803
$11,053
$12,771
$2,148$2,739
$7,170
Colonoscopy Hernia Repair Arthroscopic KneeSurgery
Normal ChildDelivery
Low Cost High Cost
10:1 3:1 4:1 2:1
High Cost : Low Cost Multiple
Source: New Hampshire Insurance Department; Safeway surveys and analysis
9HC Cleveland Clinic 05-27-08
Agenda
U. S. healthcare challenge
CAHR Background/Mission
CAHR Member Profile: Safeway
10HC Cleveland Clinic 05-27-08
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
11HC Cleveland Clinic 05-27-08
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
12HC Cleveland Clinic 05-27-08
CAHR Membership Aetna Alex Lee Inc. Bashas Blue Shield of CA Brookshire Bumblebee Seafoods C&S Wholesale CVS / Caremark Cigna Clorox Coca Cola Del Monte Foods Edison International Eli Lilly General Mills Giant Eagle GlaxoSmithKline HCA Health Net
Heinz Hershey Illinois Tool Works Jax Markets KKR Kaiser Permanente Kimberly Clarke Kohl’s Kraft Foods Kroger Longs Drugs Lund Food Holdings McKesson Medtronic Morgan Stanley Norfolk Southern PG&E PepsiCo Pfizer
Playtex Price Chopper Procter & Gamble Publix Raley’s RenderX Rockwell Automation Rockwell Collins Roll International Safeway Smuckers SuperValu Unified Western United Healthcare United Supermarkets Wakefern Wegmans Winco Foods Wrigley
13HC Cleveland Clinic 05-27-08
Agenda
U. S. healthcare challenge
CAHR Background/Mission
CAHR Member Profile: Safeway
14HC Cleveland Clinic 05-27-08
Safeway Healthcare Expenses*Index 2005 = 100
Business As Usual
New SWY Plan
* Non Union Employees moving to new SWY plan from former PPO plan
15HC Cleveland Clinic 05-27-08
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
16HC Cleveland Clinic 05-27-08
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
17HC Cleveland Clinic 05-27-08
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