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Wellness at the Workplace—The Safeway Debacle

by Jon Robison, PhD, MS

This is meant as a follow up to the great April 23rd blog—Workplace Wellness and Weight—by Fall Ferguson. As Fall described, employee wellness programs got a huge shot in the arm from the Affordable Care Act which promotes the increased use of carrots and sticks to nudge/pressure/coerce employees into engaging in worksite wellness programs by tying participation to the cost of their health insurance premiums. In this follow up I would like to briefly visit how this came to be and what, if any, science there is to back it up as an effective strategy for helping both employees and organizations.

You may know that the inclusion of this provision (aptly entitled “The Safeway Amendment”) in the so-called “Obamacare” was largely influenced by the testimony of Steven A. Burd, CEO of  Safeway Supermarket who claimed that tying employees behaviors and health outcomes to their insurance premiums was the answer to employer’s spiraling health care costs. In an article in the Wall Street Journal in 2009 he stated:

“Safeway designed just such a plan in 2005 and has made continuous improvements each year. The results have been remarkable. During this four-year period, we have kept our per capita health-care costs flat (that includes both the employee and the employer portion), while most American companies’ costs have increased 38% over the same four years.”

What ensued next was nothing short of a well-staged, Hollywood, red-carpet production. Politicians on both sides of the isle (that’s right, you heard me, both sides) embraced Burd as some sort of celebrity, if not savior. Democratic Senator and Senate Finance Committee member Thomas R. Carper, Democrat of Delaware proclaimed:

“Safeway figured out how to incentivize people to take better care of themselves, and they have flat-lined their health care costs for 200,000 employees in the last four years.”

Senator John McCain, Republican, Arizona, got into the act, telling listeners at a Town Hall Meeting in August, 2009:

“You know, there’s a guy who has become pretty famous lately, and he’s the CEO of Safeway… Safeway’s health-care costs have gone down. Why can’t we adopt that on a national scale?”

Even the President jumped on the bandwagon in a speech to the American Medical Association saying:

“It’s a program that has helped Safeway cut health-care spending by 13 percent and workers save over 20 percent on their premiums… And we’re open to help employers adopt and expand programs like these.”

The rest, as the saying goes, is history.  Thanks to The Safeway Amendment, incentive-driven employee wellness programs are more popular than ever. However, as another well known saying goes, “there is a fly” – and a large one – “in the ointment.” While it is undeniably true that Safeway’s health costs declined by 12.5% in 2006, it is also undeniably true that the employee program did not roll out until 2009 – some 3 years later! This means, of course, that the cost savings had nothing whatsoever to do with the wellness program. Additionally, when the program did finally roll out, only 11,000 of the 200,000 employees were eligible to participate – OOPS!

So, is there actually scientific research regarding the practice of tying employees’ health insurance premiums to health behaviors and health outcomes? It turns out that there is. Writing in the New England Journal of Medicine in 2011, a group of Behavioral Economists headed by Dr. Kevin Volpp put it this way:

“Although it may seem obvious that charging higher premiums for smoking (or high body mass index, cholesterol, or blood pressure) would encourage people to modify their habits to lower their premiums, evidence that differential premiums change health-related behavior is scant. Indeed, we’re unaware of any insurance data that have convincingly demonstrated such effects.”

Please remember that behavioral scientists make their living by trying to figure out ways to get people to do things that they don’t necessarily want to do. But there is more to this story. Not only is there no evidence that this is an effective strategy for lowering costs, it turns out that there is a good likelihood of negative unintended consequences. In a 2013 article entitled Workplace Wellness Regulations: First Do No Harm, The Prevention Institute concurred with the conclusions of the behavioral economists saying;

“We also have a pretty good idea of what doesn’t work, and heading the list are strategies that tie individual employees’ share of health insurance premiums to health-related behaviors and/or meeting benchmarks.”

However, they took things just a bit further. Again, please keep in mind that the only thing the Prevention Institute does is prevention. Why then are they so opposed to the strategy epitomized by the Safeway Amendment? I encourage you to read the article to find this out, but here, in bullet form are their main points:

  • Punitive measures have not been linked to improved health outcomes
  • They may instill resentment in employees
  • They are likely to shift health costs to the least healthy
  • They are likely to have the most damaging effect on people of color and low-income workers

Pretty difficult to add anything to that list! This is clearly a misguided (at best) strategy. It does not work and it engenders possibilities for all types of iatrogenic consequences. Perhaps most ironically (and sadly) this approach is very likely to penalize the very people who are less able—for a whole host of reasons—to meet the biometric and behavioral benchmarks demanded of them in order to not be charged more for their insurance premiums. This is, of course, the complete antithesis of everything that the Affordable Care Act is supposed to be about.

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