Healthcare Solutions that Work

Healthcare Solutions That Work National Chamber Foundation December 3, 2009 Shannon Campagna Vice President, Federal Government Affairs Safeway Inc.

Safeway’s Healthcare Expense Trend* Index 2005 = 100 Business as Usual

160 140

128 110

120 100

150

8.4%

138

119

0.2%

100

80

CAGR

102 88

92

2006

2007

94

101

New Plan

60 40 20 0 2005

2008

2009 F

2010 E

* Per-capita expensesfor Safeway non-union EEsmoving to new plan from former PPO plan These per-capita expensesare all-inclusive – Safeway contribution, EE premium and EE out-of-pocket expense NBCH_110909_screen

2

Unhealthy Behaviors are Expensive 2008 Incremental Cost per Condition $1,405

$1,400 Safeway incentives

$645

$600 $470

$312 Smoking

$312 Obesity

Lack of Exercise

$78

$78

Uncontrolled Hypertension

Uncontrolled Cholesterol

Source: American Institute for Preventive Medicine 2005; American Journal of Health Promotion 1991, 1993, 2000; Milliman & Robertson 1995; Safeway analysis NBCH_110909_screen

3

Obesity is a Major Cost Driver - Top 4 Top 4 chronic diseases - % of total healthcare spending 74%

20%

11% 2% 9%

10% All other

47% 19% 33%

1% Obesity

26% 27% 7% Cardiov ascular Disease

Cancer

Diabetes

Overweight & Obesity

Big 4 Total

*2008 Estimates: Total HC spending ~ $2.4 Trillion, Direct spending ~ $1.8 Trillion NBCH_110909_screen

4

Philosophy for Behavior Incentives  Individuals are responsible for their own behavior*  Health plans should be free to charge individuals the full cost of their behaviors

 When consumers bear the true cost, they are motivated to change

 The result will be improved health, higher productivity and lower healthcare costs *But not their genetics NBCH_110909_screen

5

Safeway Healthy Measures  Four key measures offered to all employees – – – –

Weight Tobacco use Blood pressure Cholesterol

74% Participation

 Participation to earn lowest healthcare premium – Voluntary – Employees and spouses

 78% participants rate good, very good, or excellent  Most common suggestion - More incentives!  Reviewed and praised by U.S. Department of Labor NBCH_110909_screen

6

Holistic Approach – Genuine Focus on Employee Health & Wellness  Free fitness center and gym membership discounts  Care management, wellness, 24-hour nurse line  Healthyfoods discount in cafeteria  CareConnect program for breast and prostate cancer  Cancer fundraising – more than $100 million to date  Engagement in policy discussion NBCH_110909_screen

7

Major Safeway Healthcare Plan Elements             

HRA account FSA account Physicals at 100% Well baby/child at 100% Age-appropriate mammograms at 100% Age-appropriate colonoscopies at 100% Integrated care management 24/7 nurse line MedExpert Behavior incentives CareConnect for cancer Transparency tools Information/encouragement of generics

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 Therapeutic equivalency switching              

with coordinated co-pays Drug facts website Rx compliance rewards soon Fitness Center Discount gym memberships Corporate nurse No-smoking campus Quit smoking programs with free aids Weight Watchers subsidies Weight management programs Cancer research fundraising Healthy food cafeteria subsidies Healthy snacks for meetings Formed CAHR Co-founded Healthy Weight Commitment 8