Using Market-Based Health Care Principles to Save Taxpayer Dollars

Last week I wrote an update in which I opined the necessity for state leaders to closely observe the ways free market organizations are using best practices to drive down health care costs. Like all state government spending, it is extremely important for us to work hard to maximize taxpayer dollars through the application of market-based solutions, and pass on as much savings as possible. It is also important for these solutions to be utilized to stop the increase in health care costs and thus take away the primary argument for those who wish to expand the role of the federal government in health care.

Last year I sent out an update stating that I would be involved in a legislative working group charged with analyzing the government’s employee insurance program. A constituent recipient of the update encouraged me to look at the program used by the Safeway Corporation to stabilize their health insurance cost. This concept would become one of the most important components of the state employee health insurance reform proposal (SB 2052) passed by the Legislature but vetoed by the Governor.

The Safeway plan is completely voluntary and drives down costs by incentivizing wellness and prevention by rewarding plan participant through lower health insurance premium costs.

The Safeway plan focuses on two base prevention concepts. The company ascertained that 70% of health care costs are the result of the lifestyle choices and 74% of all health care costs are related to the following four chronic conditions: cardiovascular disease, diabetes, obesity and cancer. They believe that 80% of cardiovascular disease and diabetes are preventable, 60% of cancers are preventable, and at least 90% of obesity cases can be prevented.

The company observed that these conditions could be prevented by incentivizing employees to voluntarily address the issues of tobacco usage, healthy weight, blood pressure and cholesterol levels.

The results have been dramatic. Since the program was started in 2005, Safeway has kept their per capita health care cost stable at a time when most companies’ costs went up by 38%. Their obesity and smoking rates are roughly 70% of the national average. 78% of employees rated the plan positively and many employees lost weight and lowered blood-pressure and cholesterol levels.

In my view, it is our job as Oklahoma legislators to implement a similar program and pass on the savings not only to state government entities, but also to county and school board governing entities which use the state employee insurance programs.

Incorporating a localized version of this program in Senate Bill 2052 was something which the entire legislative working group insisted on. Our version of this approach was designed to save taxpayer funds and to allow employees to lower their deductible and co-pay costs. I believe we are still committed to securing legislative approval for the concept in the next legislative session.

Most importantly, this approach addresses the right way to achieve health care reform because it will encourage employers working with their employees to drive down the cost, instead of the federal government getting involved with various mandates.

Next week I will write about another of the market-based concepts incorporated into Senate Bill 2052.