National Association of Insurance Commissioners

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


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


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


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


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


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


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 2:1High Cost : Low Cost Multiple

Source: New Hampshire Insurance Department; Safeway surveys and analysis


Agenda





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


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


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


Agenda





Safeway Healthcare Expenses*Index 2005 = 100

Business As Usual

New SWY Plan

* Non Union Employees moving to new SWY plan from former PPO plan


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


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


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

National Association of Insurance Commissioners

Documents

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