Focusing on what matters most. Safeway Inc. is a $40+ billion grocery retailer that has transformed its approach to health care. For the past six years the company has kept both Safeway’s and its non-union employees’ per capita costs flat, in stark contrast to the national increase in health care costs of 8.5 percent annually.

Safeway is delivering a holistic approach to health, wellness and fitness to its employees and their families with initiatives that improve their health and motivate them to become accountable, quality- and cost-conscious health care consumers. This unprecedented, fully-integrated approach became part of the national conversation on health care reform and was a driver in launching Safeway Health.

The results speak for themselves. Over the five years prior to launching a market-based health care plan (MBHP) Safeway’s health care cost trend was fairly typical of American industry. The costs increased about 10 percent annually between 2000 and 2005. Since launching its MBHP for its non-union workforce in 2006 Safeway’s results have been transformational.

Today (2011) Safeway’s all-inclusive health care costs per capita (Safeway contribution + employee premium + employee out-of-pocket) index at 100 – no change from 2005. Over the same period, national health care costs have increased more than 60 percent, and now index at 163...

Safeway has achieved its benchmark results and will continue to do so by applying three guiding principles:

> Health care costs are concentrated

> Behavior drives costs, but the correct incentives change behaviour

> Markets are critical; information enables consumer choice

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.

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.