They All Drank the Kool-Aid®! The Safeway Debacle

Employee wellness programs got a huge shot in the arm from the Affordable Care Act that promotes the increased use of carrots and sticks to nudge/pressure/coerce employees into joining worksite wellness programs by tying participation, behavior change, and health outcomes to the cost of their health insurance premiums. The inclusion of this provision (aptly entitled “The Safeway Amendment”) in the so-called “Obamacare” came about primarily as a result of 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 the 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 percent 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 aisle (that’s right, you heard me, both sides) drank the Kool-Aid and 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.”

Of course, the leaders of the health promotion community drank deeply of the Kool-Aid and headed to Washington to lobby intensely to get the amendment passed. And the rest, as the saying goes, is history. Thanks to The Safeway Amendment, incentive-driven employee wellness programs are more popular than ever. Unfortunately, as another well-known saying goes, it turns out there was a rather large “fly in the ointment.” While it is undeniably true that Safeway’s health costs declined by 12.5 percent in 2006, it is also undeniably true that the employee wellness program did not roll out until 2009 – some three 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!

Well you might be asking, “Is there actually scientific research regarding the practice of tying employees’ health insurance premiums to health behaviors and health outcomes?” It turns out 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 like Dr. Volpp 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 titled 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 matters just a bit further. Again, please keep in mind that the only thing the Prevention Institute does is prevention. Why then is the organization 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 the main points. Punitive measures:

  • Have not been linked to improved health outcomes.
  • May instill resentment in employees.
  • Are likely to shift health costs to the least healthy.
  • 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 various iatrogenic consequences, both personal and organizational. 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 to not be charged more for their insurance premiums, which they are also less likely to be able to afford. This is, of course, the complete antithesis of everything the Affordable Care Act is supposed to be about. Our advice to everyone involved in worksite health is – please step away from the Kool-Aid!

Jon Robison, PhD, MS, MAJon is an accomplished speaker, teacher, writer and consultant. He has spent his career advocating that health promotion shift away from its traditional, biomedical, control-oriented focus, with a particular interest in why people do what they do and don’t do what they don’t do. Jon has authored numerous articles and book chapters and is a frequent presenter at national and international conferences. He is also co-author of the book, “The Spirit & Science of Holistic Health — More than Broccoli, Jogging and Bottled Water, More than Yoga, Herbs and Meditation.” This work formed the foundation for one of the first truly holistic employee wellness programs — Kailo. Kailo won awards in both Canada and The United States, and the creators lovingly claim Jon as its father. Contact Jon at: jon@salveopartners.com or jonrobison.net.

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