Safeway CEO Supports State Health Plan

SACRAMENTO, Calif. Gov. Arnold Schwarzenegger proposed massive changes in California's health care system last week a plan that was immediately endorsed, with a slight caveat, by Steve Burd, chairman, president and chief executive officer of Safeway, Pleasanton, Calif. Under Schwarzenegger's plan, any business with 10 or more employees that does not offer health insurance would have to pay 4% of its

SACRAMENTO, Calif. — Gov. Arnold Schwarzenegger proposed massive changes in California's health care system last week — a plan that was immediately endorsed, with a slight caveat, by Steve Burd, chairman, president and chief executive officer of Safeway, Pleasanton, Calif.

Under Schwarzenegger's plan, any business with 10 or more employees that does not offer health insurance would have to pay 4% of its payroll into a state insurance fund. Burd said the 4% contribution “is frankly too low and should be higher.”

In addition to mandated employer contributions, doctors would be assessed 2% of their earnings and hospitals would pay 4%.

“The governor has put forth an innovative and broad-based proposal to fix California's broken health care system, and I applaud his leadership,” Burd said during a panel discussion with Schwarzenegger and leaders from business, labor, government and health care. “The proposal contains key elements critical to any health care reform proposal, including market-based solutions, cost controls, more individual and shared responsibility in health care decision-making and a greater role for preventive care and behavior.

“With the combined leadership of the governor and the legislature, I am confident California can enact a bold and innovative reform measure this year. There is an opportunity for California to lead the national debate on health care reform and drive the federal government to finally take action in solving this national crisis. With business, labor, government, consumer groups and health care providers working together, we can collectively solve this problem.”

During the past two years Safeway has implemented a health care plan for its non-union workforce that aligns personal incentives with healthy choices. According to Safeway, more than 70% of eligible employees will be enrolled in the plan this year, which pays 100% of preventive care and provides incentives to improve health care decisions.

Safeway said its total health care costs for covered employees have decreased 30% during the past two years.

Schwarzenegger said his plan would control spiraling health costs while ensuring coverage for all children and adults who currently lack insurance. “If you can't afford it, the state will help you buy it,” he said, “but you must be insured.”

Massachusetts — the only state that requires all residents to have insurance coverage — passed a law last year mandating that employers without health coverage pay $295 per employee per year into a state fund, while neighboring Vermont requires employers who don't provide health coverage to pay $355 per employee.

Maryland passed an employer mandate last year requiring companies with more than 10,000 employees to spend up to 8% of their payroll costs on health coverage or an equivalent — a law subsequently overturned in federal court.

At the municipal level, New York City requires large grocery store operators without health plans to pay non-union employees approximately $3 an hour more for health coverage, while San Francisco requires medium- and large-sized employers to spend $1.06-1.60 an hour per employee on health care.