Steven Burd, CEO Safeway, Phil Bredesen, Gov Tenn, Reed Tuckson, UnitedHealthGroup
by Matthew Holt
Burd is definitely onto something. For medium and large employers, a high deductible plan + HRA/HSA is smart and encourages employees to be aware of their health costs.
The problem in Safeway’s implementation is the free preventative care. The casual observer would worry about overutilization of free services but over the long-term, I think the opposite scenario will be realized: over time, Safeway can expect underutilization. It’s a simple paradigm of human nature that free resources with immediate benefit will quickly become overutilized while free resources with future benefits will become underutilized. For example, if Starbucks were to offer a coupon for free coffee with every purchase that’s redeemable anytime, it would kill their business. But if the free coupon was only good 6 months from the date of purchase, you’d see people throwing away the coupons after the first few weeks of the promotion. The dilemma is in coming up with a solution that provides consumers with future benefit disguised as or combining features of immediate benefit.
My solution to Safeway would be to subsidize preventative care while providing a strong incentive for utilizing it. Charge a $10 copay for preventative care. Every 6 months, if the employee provides proof that they went if for a full exam/check-up, deposit $100 into their HRA/HSA or 401k. A funky application of game theory but it’s well-known that people react very strongly the possibility of missing out on free money. The 6-month redemption period promotes minimum requirements for preventative care utilization and combined with the low copay, discourages overutilization.
[…] missed the session with Steven Burd that Matthew Holt blogged on (Steven Burd, CEO Safeway…) but luckily Burd came down and repeated his speech at the Employer CEO/CFO track. Burd’s […]
[…] Governor Bredesen on World Healthcare […]
I thought his slides would be made available. Where are they?
Thanks,
Cyndi Allgaier
AARP
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