Supermarket Chain Says Healthy Living Incentives for Employees Reduce Health Care Costs062409_smoking

In a June article, titled "One Way to Lower Health Costs: Pay People to Be Healthy," Knowledge at Wharton described research led by Wharton medicine and health care management professor Kevin Volpp, which found that people who are offered financial incentives are more likely to lose weight, quit smoking and do other things that doctors say will make them healthier, and that providing the incentives is less costly than treating the illnesses that the healthy behaviors avert. Volpp conducted the research with Mark V. Pauly, Wharton professor of health care management; George Loewenstein, professor of economics and psychology at Carnegie Mellon University; and others.

Today, National Public Radio reports on a company that says it has achieved the same result with an incentive program it adopted five years ago.

Safeway CEO Steve Burd tells NPR that employees receive a discount on their health insurance if their body mass index is below 30 (a higher number is considered obese). "If it's above 30, that means they pay about $318 more than someone who is in the other camp," says Burd. "But the beauty of our plan is that if you make a reduction of, let's say 10% of your body mass index, we write you a check at the end of the year for making that progress." He says the company also provides financial incentives to employees who make gains in quitting smoking, bringing hypertension under control and lowering cholesterol.

Safeway's program has not cut its health insurance premiums, but it has kept them from rising. NPR notes that critics, including the American Heart Association and the American Cancer Society, suggest that such incentive programs discriminate against those who may be less healthy for a variety of reasons, including pre-existing conditions or socioeconomic status. Burd counters that it is ironic for such groups to have "lined up against this kind of incentive, yet … support tobacco taxes because they say it … deters people from smoking. In our particular case, when we have an elevated premium for a smoker, that premium goes into our health care fund with the ability to take care of that employee 10 to 15 years down the road, should they develop lung cancer."

For all its efforts to reduce employee health care costs, Burd told NPR that Safeway would not support regulatory efforts to combat obesity among its customers. Such rules might limit the sale of sugary cereals, or place a tax on junk food, sweets and certain kinds of fried food. "America was built on the notion of free choice," Burd tells NPR, "and people are free to choose what they eat and whether or not they exercise,"