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Lots of reactions to Safeway CEO Steve Burd’s healthcare comments, reported yesterday on MNB.

One MNB user wrote:

I actually was CEO of a health insurer so I speak with some knowledge and Burd’s plan is interesting with some great effects but he attributes the spiraling health care problem to just a few reasons. Here are a few facts.

First, all providers inflate the cost of the “uninsured” because they use “list prices” to estimate the cost. However, no one actually pays list prices. The actual cost to the providers is way below what they estimate. Why? Because the high list price keeps the pressure on to raise reimbursement rates. The providers need increases to cover their cost increases but the uninsured are not the reason. A hospital may charge $3300 for a night but check what they get reimbursed - $800. I know - I was just in the hospital for 3 days. Total charges on the bill - $200,000. Actual reimbursement $21,000. It is a game the providers play and the insurers encourage.

Second, we spend way too much on services. State mandates that require certain services to be included in all health policies are a major issue. Here is an example. Chiropractic care is included but if we gave the consumer a choice would all buy it, particularly if the cost was known? We do not all buy satellite radios for our cars why should we all have to buy chiropractic care? I do not want it but it is included in the cost even if I do not use it.

Third, the federal government and its Medicare reimbursement do not fully cover providers’ costs and therefore others have to foot the bill. It is an indirect tax and people do not realize it. This problem will only get worse as more people go on Medicare.

Fourth, we are increasing the “intensity” of the practice of medicine with new drugs, new tests, etc, etc. We in the U.S. expect the best in health care, no matter the cost and we get it. You should have seen the machines and procedures done on me and the costs compared to the previous methods. Probably costs three times as much as the former procedures!

Spiraling health care costs is a complex problem and Burd is not explaining it fully

Medicaid also fails to cover the cot of care in most states so the difference is shifted to the backs of private payers as with Medicare. The drop Burd has seen at Safeway is with management employees who are better educated and more interested in the topic so they respond better than union workers who are used to full reimbursement. While Burd has seen improvement I will bet big money it is one time and nest year costs begin rising again as the overall "trend" in health care costs has not been "upset" by the changes Safeway has implemented.

Another MNB user wrote:

I saw this quote today:

"Wise men talk because they have something to say; fools, because they have to say something." –Plato

Sometimes I think (and perhaps you think) I fall in that latter classification, but while I do not have the same knowledge base as Mr. Burd I do have a few of comments on Mr. Burd's presentation and the issues of medical insurance and costs that I believe are relevant.

1. Increasing the deductible by $1,250 and putting $1,000 in a HRA doesn't seem to me to be an economic benefit for the employer. In my 27 years of corporate employment I probably would have pocketed 23,000 of that $27,000 HRA. There must be many employees whose annual medical costs are less than $1,000 a year.

2. While preventive medicine and wellness programs are the right thing to do I would guess the jury is still out on whether that will be of economic benefit to the employer. Moreover, a lot of these wellness programs are a joke - as was the case with the diabetic education classes which cost my wife's insurer $250.

3. While Burd mentioned the cost impact on us "regular folks" of medical care providers having to recoup the losses from care of uninsured and underinsured, he should have emphasized the impact of significant cost shifting that occurs because Medicare and Medicaid pays providers well below the actual costs of their services.

4. The idea of insurance is to spread the risk. Particularly when buying an individual policy one of the problems of affordability is that the insurance industry actuaries now have the ability to predict risk with such uncanny certainty that a great many people just cannot afford the premium they ask for their particular risk category.

5. Then there is the politically sensitive issue of rationing health care. None of us are going to live forever and many of these end of life medical care expenditures just do not make sense. I knew a 90+ year old woman in poor health confined to a nursing home that never refused a medical treatment or procedure. I am 64. If ten years from now I was told that I needed a heart transplant I am pretty sure I would say "no thanks".

6. Congress is often part of the problem - for example, the HIPPA provisions on patient confidentiality added a lot of costs with minimal real benefits to 99% of us.

MNB user Rush S. Dickson III wrote:

I agree with Mr. Burd - market driven, individual responsibility…The unions will resist because they are myopic about holding onto power, even at risk of their own demise. That's really smart isn't it? Speaking of business models that need revision.

I agree with Steve Burd's assessment. Who is going to get the health care providers on board? When preventative care becomes as accepted (and paid for) as acute care through our health care provider we can then believe we are finally on the right track as a nation. Unfortunately, current healthcare practices and policies promote band-aids at this time. Mammograms are readily available to almost every woman, even if from a clinic. Not getting them is not taking responsibility for your own life. Unfortunately, preventative screenings and care for other major killers are not as readily available and approved by health care providers and usually quite expensive for the average person to take on without health care participation (e.g., colonoscopies). Yes, education is critical. Yes, people need to take responsibility for their own health by taking on a healthier lifestyle and be proactive in screening for diseases early.

Unfortunately, without some respite on the costs and availability of these screenings, we will continue to lag in this critical aspect of improving the health of our nation.

And don't get me started on how poorly we take care of the elderly and the
cost of prescription drugs…

Let the dialogue continue.

We had a story the other day about how the US Food and Drug Administration (FDA) is recommending that voluntary standards be established for the first time covering the gluten-free sector of the food business. A story about this in the Wall Street Journal quoted Jane Andrews, a registered dietitian at Wegmans, as saying that “she's surprised the FDA proposed to make it misbranding if companies label naturally gluten-free products gluten free. Wegmans has done that with products such as pasta sauce because many consumers demand to know, she said.”

There was a lot of discussion about this on MNB yesterday, with some questioning whether Andrews was right or not.

Well, yesterday we received the following email from Jane Andrews:

I’m only too aware of FDA’s regulations regarding claims on foods that are naturally “fat free” or “low in sodium” and should have expected a similar restraint on claims for gluten free foods. Wegmans practice has been to simply drop off claims from foods that are naturally low in fat since the extra words required as in “Bread, a low fat food” spoil our simple labeling system of front panel icons that we call Wellness Keys. We only use the icons on foods with more than one ingredient. In our case (and I suspect other retailers with similar programs) we are not specifically processing food to be gluten free. Rather, our labeling system lets consumers readily see the hundreds of Wegmans Brand foods that are gluten free just as they are.

Why is this important? Most people have no clue which foods contain gluten and which don’t. They might think that “buckwheat” contains gluten (it doesn’t) or that “spelt” doesn’t (it does). And they have no idea how to decipher an ingredient statement that may never say the word “gluten” and yet be loaded with it. Imagine yourself as newly diagnosed or maybe you’ve invited someone with Celiac Disease to dinner. You start to understand how a simple icon with the words “gluten free” has created so many passionate advocates among our shoppers. We’ve even gotten an award from the Columbia University Celiac Disease Center for the help we provide to shoppers seeking gluten-free foods.

We believe that this aspect of FDA food labeling regulations could have an unintended consequence. If FDA makes it easier for companies to make claims on the more heavily processed foods, should we be surprised when consumers think “SnackWell” rather than “applesauce” when looking for a fat free snack?

You better believe that we will be commenting to FDA. And we’ll encourage consumers and other retailers to do so as well.

(And thanks for creating the forum that lets retail nutrition nerds like me debate the potential impact of these regulations.)

We have a general rule about stuff like this: We trust the folks from Wegmans to do the right thing more than almost anyone else. And certainly more than the bureaucrats from FDA.

KC's View: