Interesting bit from Safeway's CEO. What he describes is ridiculously obvious, of course:
At Safeway we believe that well-designed health-care reform, utilizing market-based solutions, can ultimately reduce our nation's health-care bill by 40%. The key to achieving these savings is health-care plans that reward healthy behavior. As a self-insured employer, 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.
How did they manage that?
"Safeway's plan capitalizes on two key insights gained in 2005. The first is that 70% of all health-care costs are the direct result of behavior. The second insight, which is well understood by the providers of health care, is that 74% of all costs are confined to four chronic conditions (cardiovascular disease, cancer, diabetes and obesity). Furthermore, 80% of cardiovascular disease and diabetes is preventable, 60% of cancers are preventable, and more than 90% of obesity is preventable.
...Our plan utilizes a provision in the 1996 Health Insurance Portability and Accountability Act that permits employers to differentiate premiums based on behaviors. Currently we are focused on tobacco usage, healthy weight, blood pressure and cholesterol levels.
Safeway's Healthy Measures program is completely voluntary and currently covers 74% of the insured nonunion work force. Employees are tested for the four measures cited above and receive premium discounts off a "base level" premium for each test they pass. Data is collected by outside parties and not shared with company management. If they pass all four tests, annual premiums are reduced $780 for individuals and $1,560 for families. Should they fail any or all tests, they can be tested again in 12 months. If they pass or have made appropriate progress on something like obesity, the company provides a refund equal to the premium differences established at the beginning of the plan year.
At Safeway, we are building a culture of health and fitness. The numbers speak for themselves. Our obesity and smoking rates are roughly 70% of the national average and our health-care costs for four years have been held constant. When surveyed, 78% of our employees rated our plan good, very good or excellent. In addition, 76% asked for more financial incentives to reward healthy behaviors. We have heard from dozens of employees who lost weight, lowered their blood-pressure and cholesterol levels, and are enjoying better health because of this program. Many discovered for the first time that they have high blood pressure, and others have been told by their doctor that they have added years to their life."
Like I said, ridiculously obvious. They're apparently in talks with the union to add similar provisions to their other contracts, and want the ability to offer larger rewards to employees who test well.
Something they're currently prohibited by law from doing. Which is just ridiculous.
Getting this stuff down is not easy, and I speak from personal experience. You'd never guess by looking at me, but my cholestrol levels are naturally quite high, despite a thin body type and a baseline diet that was already better than most. Thankfully, my carotid artery ultrasound was about perfect, one of the best my cardio-specializing doc has seen in a couple of years. That has bought us the time to do things without using statin drugs. Something I'd rather avoid, even though my genotype means they'll be more effective on me than on most people.
The last 3 months have involved more exercise, a lot of things I no longer eat, and a couple of non-medication dietary supplements like tasteless fish oil capsules (for Omega-3 etc.). Not there yet, but some of the reductions in a recent re-test (HDL IIIa/b, triglycerides) were pretty dramatic. The next 3 months are going to be about driving them further, into the "green" area if possible, without prescription drugs. Which may be possible. We'll see.
Is this fair? No. Life handed me a stacked deck, and it's one that could eventually kill me. If I worked at Safeway, it would increase my insurance costs.
It isn't about "fair." The deck you get is the deck you get. It's about health. It's about the rewards of living a better life. Which requires responsibility, cooperation, and effort. Less if you start with a good deck, more if you start with a bad one.
Personally, I'd like to be able to go back to eating those pizzas and bacon cheeseburgers now and then, and not care, knowing that I wasn't going to gain weight doing it. Which, admittedly, wasn't "fair" either - I was often reminded of that.
But the point is the goal, not the effort. Maintaining my health isn't anyone else's responsibility. It's mine.
Ultimately, whatever we do as a nation in this area has to be affordable (a metric that shrinks by the day, for all government programs, under current economic policies). But it also has to reward people for making good decisions - decisions that will improve both systemic costs, and their own lives. Research shows that the rewards approach is psychologically more effective, and it's more politically palatable too.
It ought to be front and center in the current health care debate.
I assume that "health-care plans that reward healthy behavior" is fine when Safeway does it, but evil when the government does the same.
I remember hearing a program on Diane Rehms show a few years back about a Detroit hospital that set up a pre-diabetes wing. The goal was to target people who were at risk for diabetes, and give them all the tools needed to prevent full onset diabetes.
It cost the hospital very little to run, and was massively successful. So successful in fact, that they started losing money on diabetes drugs, insulin and other costly procedures. Furthermore, insurance companies realized that it wasn't in their financial interest to pay for pre-diabetes programs. (low likelihood of customers staying with the same plan for 5-10 years).
Long story short, program was terminated.
Our medical system is designed to fix illness, not prevent it. They're are billions to be saved in our system by favoring prevention. However, this would also lead to fewer procedures and fewer pills (which is where the medical establishment gets their paycheck.)
"I assume that "health-care plans that reward healthy behavior" is fine when Safeway does it, but evil when the government does the same."
You can opt out of working at safeway.
Realistically, this guys numbers are only speaking to those young and healthy enough to be employed, and that's not what is driving healthcare costs.
The real money is spent on the dying, mainly the elderly. In the long run studies show that reckless behavior actually saves healthcare costs- dying young of lung cancer is cheaper than withering away 20 years later of 10 different system failures. Those are the costs that eat up the system, and medicare only pays what they feel like paying which shifts the burden to the private system as providers need to make up the losses.
Thats all well and good except that as the baby boomers age, those kinds of costs are about to EXPLODE. We are completely missing the boat on that right now, rearranging deck chairs on the titanic. Forget about breaking your arm skiing, its quadrupling the number of old timers in intensive care in a given day that is going to bankrupt the system.
Safeways plan is well and good, but its a finite level of savings, a one time fix. They can only keep their employees so healthy, after that as care continues to rise in cost they their costs will rise with it, or they will cut benefits or increase premiums. Everyone is missing the point here- we don't have a health insurance cost crisis here (or at least its only a symptom), we have a health cost crisis, and its a simple matter of demand outstripping supply.
#4: Not only can you opt out of working at Safeway, but:
"Safeway's Healthy Measures program is completely voluntary and currently covers 74% of the insured nonunion work force."
I think it is great, as long as some people don't go too far practising sport, or costs will increase again!
Alchemist (#2)
There are public health's screening programs that really work. Those linked to the most common kinds of cancer have had success, not only in saving lives, but in reducing costs. There is a lot to be done in prevention.
J, don't get me wrong, medicine is very good at preventative measures when a clear-cut test can be applied. In the cases of cancer, there really is no low-cost alternative. Earlier is better, but it is always expensive.
But western medicine is very bad at fixing basic health problems with low cost, simple alternatives:
Blood pressure to high? Take a pill!
Depressed? Take a pill!
Can't sleep? Take a pill!
(etc).
Pills are very very profitable, but many "pill-relief" problems are symptoms of larger, missed issues. Besides, pills also create additional issues that can lead to other long term health problems. (And then there's prescribing fancy drugs when cheap generics do equally well.
#5: Exactly. What's the selection bias in that sample?
Not necessarily, spartan. See Alchemist in post #2. Also J Aguilar.
spartan2600 asked:
As you might guess from the post, Alchemist and I are also somewhat in sync on the whole issue of pill-based fixes. Not that they're never useful, but they're a poor first resort that doesn't remove key underlying problems.
As I said above, however, punitive measures along that road are just asking for trouble. A fast food tax? I can only dream of the Democrats being so insanely stupid that they'd submit a bill.
Rewards or increased portable coverage credits for the kinds of test results Safeway rewards, and regulatory barriers to larger corporate rewards shoved aside? Sure. Put those kinds of ideas right beside tort reform that creates a civilized legal system, and we might be on our way to real improvements in costs AND in health.
What Mark says ought to be perfectly obvious too. That is, unless Safeway's CEO is factoring in retirement costs, and even then you'd have a good deal of bias since most of Safeway's workers don't retire with the company.
The only real solution to health care is technological. (The two main candidates, I think, are therapeutic cloning and/or nanotech.) It's sort of akin to the idea that to travel very widely in the ancient world you had to be rich, but relative transportation costs dropped as a result of trains, autos, and planes. In the socio-political dimension everything will depend upon whether we opt for a Rolls Royce oriented system, or the Tin Lizzy. So far we seem to have a fear-driven preference for the Rolls, but things haven't really played out very far yet. If we stay in that mode, there will be major social unrest, because it will mean that some people live a very long time and others live only a fraction of that. At present the life expectancy isn't really driven by wealth, except at the margins. But if we head in the latter direction, health care costs will drop, but the medical profession will no longer be the guarantee of wealth that it is now. There'll be a lot of unemployed doctors (as hard as that is to believe).
I should also say that this is probably the analog of a quadratic function, so it has more than one "root." There may be at least two ways to get there.
Or not.
Joe:
I agree about the punitive thing. Not only would these kinds of measures not reduce health care costs, but they're politically impossible. I think there's some irony here, in the sense that we're talking about a problem that will probably disappear (like the flies in the days of horsedrawn vehicles) but the solutions will create new, different, and in some ways even more challenging problems. Some will be so strange that it's hard to even contemplate them now.
That's an interesting comment. Can you talk about that some more?
I'm thinking of a series of lectures by Leon Kass at Princeton, outlining some of the consequences of "a more perfect human." For instance, life extension would probably create profound changes in the relationship of fathers and sons, because the son could no longer be assured of replacing the father. Genetic engineering would pose impossible dilemmas for expectant parents. Go to James Madison Archives 2006-2007 and scroll down to the Lectures by Kass, for November 6, 7, and 8.
One thing to consider is that a large portion of medical costs have come from technology. Even 50 years ago, you got cancer, and you were basically dead. Now we have very expensive technologies that we can use over and over again to prolong life. It's a good thing, but it also explains why healthcare costs are going to go through the roof.
I expect the same from nanotech, biotech or whatever tech is coming down the pipeline. It is not going to be safe, or accessible, for quite a while. But when it does, health costs are going to skyrocket....
The Greeks and Romans had some rather impressive automation, but they hadn't mastered the automation of production, so they were "one off" devices. Not a direct analog to what you're saying, since you're not speaking of economies of scale, but one could argue that the cost of new treatments is something other than a "geometric" function. Costs initially increase at an increasing rate, then increase at a decreasing rate, and finally invert, decreasing at an increasing rate. This would follow from some sort of fundamental breakthrough in miniaturation, for instance.
Well I sure don't see why this would be the case. Cost/price would certainly start at a pretty high rate (even higher than we have now) but they'd be headed in the other direction... (down). That has always been the case with breakthrough technologies, and providing nanotech ends up being something analogous to a "jackknife" rather than a "Mercedes" then health care would be replaced by other problems, such as those Kass outlines. If it stays in the Mercedes category you can expect huge social unrest. It would almost guarantee an end to liberalism. I just don't see that happening, but it could well be a turbulent era.
The answer is indeed technology, at a level we probably can't foresee right now. A breakthrough might happen when we be able to replace the genetic content of a particular kind of cells in a living body.
New vaccines that protect against illneses that cause some kinds of cancer can be considered a glimpse of what may happen in the future. Doctors may not work in hospitals, but in research centers, probably far away from their patients, as they process a lot of information to fine tune genetic treatments. Those patients may not expend a night outside their home. Hospitals could be left, in general, just for stabilization of sudden sympthoms...
But, first of all, for that to happen, there must be a pressure on costs. As it happen with the Romans, they had invented devices for automation, but they considered them simply a game, since they had all the slaves they wanted to carry out their everyday tasks.
Assuming the State the main role would lift pressure on those costs, slowing the process, manipulating the market, as it always occurs.
Secondly, people will still die: right now, rare illnesses are focusing more attention. This trend will increase and an atomization of the medical field of study is probable, as it is that patients of a smaller countries be treated by doctors from other ones. The National Health System may not be so "national" after all, but leave room for an international market.