Source: Centers for Medicare and Medicaid Services (CMS) ..

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National Association of Insurance Commissioners
May 30, 2008

• Martin R. Wilson
• Coalition to Advance Healthcare Reform

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Agenda

• U. S. healthcare challenge
• CAHR Background/Mission
• CAHR Member Profile Safeway

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Healthcare Spending Growth 4.0 Times CPI
2,180
4.0 X
NHE
540
CPI
Source Centers for Medicare and Medicaid
Services (CMS), Revolution Health, Safeway
analysis
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Healthcare Costs as Percent of GDP
Healthcare Annual Cost Growth Scenarios
1970 Level 7.2
Source Safeway analysis
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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 behavioryet 70 of
  healthcare costs are behavior driven
• Providers of healthcare have little incentive to
  be cost consciouspaid for services delivered,
  not results

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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 examplethe private sector can
  effectively drive the policy solution for the
  nation

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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
Preventable / Manageable
Source CDC, HHS
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Value of Cost Transparency
101 31 41 21
High Cost Low Cost Multiple
Source New Hampshire Insurance Department
Safeway surveys and analysis
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Agenda

• U. S. healthcare challenge
• CAHR Background/Mission
• CAHR Member Profile Safeway

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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

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CAHRs 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

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CAHR Membership
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Agenda

• U. S. healthcare challenge
• CAHR Background/Mission
• CAHR Member Profile Safeway

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Safeway Healthcare Expenses
Index 2005 100
Business As Usual
New SWY Plan
Non Union Employees moving to new SWY plan from
former PPO plan
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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

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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

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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

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