In what is among the most up-close-and-personal incentives offered by an employer to motivate healthy behaviors, Safeway, the grocer, is implementing a program to reduce health insurance premiums for those employees who buy healthier foods at checkout.

Among a group of employees who participated in the FoodFlex pilot last year, the program resulted in a 13% decline in medical costs per capita.

FoodFlex is an online program linked to Safeway’s loyalty card program. Once someone enrolls in FoodFlex, the program tracks the nutritional quality of food that the consumer purchases at any Safeway store. Participants can provide various information about themselves and their families, such as exercise and physical activity levels. FoodFlex then generates a nutritional profile of the consumer’s food purchases and offers advice on other products that could be healthier: think of a soup brand with a lower sodium content, or a multigrain bread versus a white loaf. The metrics behind FoodFlex’s recommendations are benchmarked against the USDA’s recommended levels of 25 vitamins and nutrients.

Safeway launched FoodFlex in November 2007 and is planning to integrate it into Safeway’s employee health plan in 2009.

Safeway’s CEO Steve Burd said in a press release, “If someone wants to opt in to demonstrate a nutritious lifestyle, I think we’ll be the first company to grant premium reductions for that. I think other companies will follow.” Burd compares this approach to the way auto insurance is calculated: healthier behaviors get premium discounts.

Safeway has begun to evolve into what the company is calling “Lifestyle” stores under its various brands which include Safeway, Vons, Pavilions, Dominick’s, Randalls, Tom Thumb, Genuardi’s and Carrs/Safeway. The company had been migrating toward health objectives for a couple of years, already marketing private label such as Eating Right and O Organics.

Health Populi’s Hot Points:
According to Progressive Grocer magazine’s analysis of the top 50 grocers, “The Super 50,” Safeway is the third largest grocery chain after #1 Wal-Mart and #2 Kroger. Safeway’s top position in the grocery league table makes the FoodFlex program something to closely monitor. You’d better believe the competitors in the tight-margin food business will be. Grocers represent one economic segment in the U.S. that have a difficult time justifying the cost of health insurance for employees balanced against profits per employee. It will be also be instructive to observe whether there will be consumer backlash against this concept. Store loyalty cards have been collecting consumers’ personal retail purchase data for years, but thus far these data haven’t been used for specific, personalized health recommendations. Does this concept rub up against HIPAA privacy provisions? If the consumer opts-in to the FoodFlex service, perhaps not. But privacy advocates and lawyers will undoubtedly watch how this program rolls out to both Safeway employees and the general public.