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What Stewart Mills’ biggest business success says about how he might work in Congress

Mills may be light on political experience, but he touts his remake of the retail chain’s health plan as a central reason why voters could trust him to be an effective policymaker.

Stewart Mills doesn’t have much political experience.

Sure, the 44-year-old Republican candidate for the 8th District congressional seat ran in 2014, but he’s never held elected office — since age 14, he worked at his family’s company, Fleet Farm, and rose to political prominence on the strength of a pro-gun YouTube video.

Meanwhile, Democratic Rep. Rick Nolan, who narrowly defeated Mills last election, has a lengthy career in public life — he represented central Minnesota in Congress in the 1970s, and has held his current job since 2013.

There is one area, though, in which Mills claims some real policy experience: health care. For 15 years, Mills managed the health plan offered to Fleet Farm’s 6,000 employees, and he’s touted that resume point as a central reason why voters could trust him to be an effective policymaker.

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What Mills did with Fleet Farm’s health plan offers a rare example of how the candidate puts his pro-business, anti-government philosophy into action — and gives a glimpse of how he might function as a member of Congress.

How Mills changed the Fleet Farm health plan

Mills began his dive into the world of health insurance in 1999, when at the age of 27 he took over as Fleet Farm’s director of personnel, overseeing health care benefits as well as other things like 401k and profit-sharing benefits.

He came to the post with little formal experience: he had taken health care classes while getting his degree at Northwood University, and he had participated in the Fleet Farm plan while working for the company.

For most of Mills’ time in the job, Fleet Farm had a self-insured group health plan — sometimes called a self-funded plan — which places upon the employer the financial risk of covering employees’ health expenses. Fleet Farm decided what coverage it wanted  to offer employees, put up money to cover the costs in a trust,  and then contracted with a third-party administrator — a company like Blue Cross Blue Shield, for example — to administer the plan.

Health care benefits were only offered to full-time employees at Fleet Farm. A typical store might have 100 full-time employees, with anywhere from 60 to 110 part-time employees, depending on the season.

Seven years into the job, in 2006, when the rates of Fleet Farm’s plan went up, Mills set out to devise a new approach to employee health care.

“We wanted to keep the same level of benefits but hold down costs,” he said. “What I did, broad strokes, is stepped back and said, anything you tax you get less of, and anything you subsidize you get more of, so let’s design a plan that is going to make our employees healthier.”

He was encouraged by studies showing that a high percentage of medical costs are preventable — as much as 50 percent, he said. “We had a $34 million plan with 6,000 people in it. Any dollar we could save is a dollar we could save employees.”

The prevention-oriented approach is what Mills said distinguished Fleet Farm’s plan — and what he claims made it a model for other companies to copy.

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He explained that Fleet Farm picked up 70 percent of the employee’s insurance costs, leaving them to pay a 30 percent premium, with the money stocked in the company trust fund.

But Mills and his colleagues implemented a system through which employees could get their personal premium reduced to zero by submitting to one or more elements of a wellness program — called Mills Health Works — designed to bolster the prevention Mills talked about.

Employees could reduce their contribution by five percent by, for example, completing an online health assessment via the third-party administrator, which was Blue Cross Blue Shield. They’d get the same reduction by proving they exercised regularly, did not use tobacco products, lost weight, and improved blood pressure and cholesterol.

“If you did the online health assessment, exercised moderately, you didn’t smoke, your cholesterol and blood pressure was where it was, your BMI was where it was… You got health insurance for free other than co-pays or deductibles,” Mills said.

According to Mills, not only were employees healthier with this plan, but they were richer, too. Mills said that, at first, rates did increase, as people went on prescription drugs upon finding out they had conditions like high blood pressure.

“Then we saw a steep drop-off, when they were medicating correctly, they weren’t having the issues that were driving costs. The second year, [costs] were flat again, and the third year, because people were now healthy in the first and second years, we saw an actual decrease… in 2009, we were able to rebate money back. We gave money back to employees,” he said.

Mills was not shy about taking credit for what he called a huge success.

“I probably have, over my career, less than a dozen things I can say I did by myself. This health care plan was entirely my baby. I was the coach and the quarterback,” he said.

“It’s something I’m very proud of, and I can look at my resume and say, that’s something I did, it’s an idea I had, I put a team together, we did the work, and we did right by our employees.”

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Was it a good plan?

These days, programs like Mills Health Works are common.

A 2014 piece in the New York Times cited a Kaiser Family Foundation study which “found that 36 percent of firms with more than 200 workers, and 18 percent of firms overall, use financial incentives tied to health objectives like weight loss and smoking cessation.”

That same study found that employers tend to be bullish on the positive effects of these programs in saving money and improving employees’ health. But the Times also drew on data to question how effective they really are.

“Rigorous studies tend to find,” wrote the Times’ Austin Frakt and Aaron E. Carroll, “that wellness programs don’t save money and, with few exceptions, do not appreciably improve health.”

There’s also another way of looking at health care-related financial incentives — as penalties on those who don’t comply.

“Wellness programs can achieve cost savings — for employers — by shifting higher costs of care onto workers,” Frakt and Carroll wrote. “In particular, workers who don’t meet the demands and goals of wellness programs (whether by not participating at all, or by failing to meet benchmarks like a reduction in body mass index) end up paying more… Some believe this can be a form of discrimination.”

Mills hit back at that idea. “It’s all how you look at it,” he said. “It’s either the carrot or the stick. In our case, we were charging 30 percent for individual premiums regardless, and we gave them an opportunity to buy it down to zero.”

For some people, Mills said, the program “didn’t come that easy, and saw someone else getting a benefit they didn’t get, and saw it more as a stick.” He also said there were exceptions and accommodations for workers with disabilities or injuries.

Mills resisted the notion that his program could be looked at as a way to shift costs onto workers. But his main rebuttal to the point Frakt and Carroll raise is that Fleet Farm’s plan was voluntary.

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“You could take it or leave it,” Mills said. “If someone wanted to opt out, they could. There were only three or four people in my entire career, those 15 years I administered the health plan, who actually opted out of it.”

Painting his program as a success is important for Mills’ candidacy — it is, after all, his main experience really working with the kind of policy that members of Congress are engaged in on a regular basis.

Mills did not share any data on how Fleet Farm employees performed on specific health indicators, like blood pressure or cholesterol, with MinnPost.

From a health outcomes perspective, Mills’ evidence was mostly anecdotal, or related to the company’s bottom line or employees’ pocketbooks.

“We had testimonials at store meetings where people were breaking down in tears about how they were able to go on bike rides with their kids for the first time rather than being stuck on the couch,” Mills said. “We had some real Oprah Winfrey moments at store meetings.”

“We packaged it as a positive, we never saw it as a negative… We saved them money and saved our plan, our employees, tens of millions of dollars.”

Obamacare comes along

Just a few years after Mills’ new health plan went into effect, Congress passed the Affordable Care Act — a law that the candidate claims had a significant, negative effect on Fleet Farm.

In 2014 and this cycle, Mills has argued that the company was taxed to subsidize Obamacare, without receiving any of the benefits of the law.

Mills told MinnPost that once the law was implemented, Fleet Farm had to pay hundreds of thousands of dollars into so-called risk corridors — which were meant to stabilize premiums during the early implementation of the ACA by spreading financial risk across plans — subsequently driving up costs.

“We thought a six to eight percent cost increase was absolutely horrible. We did the best we could to hold it down, and we did have a rate increase, I say directly due to Obamacare.” He said the Fleet Farm plan was not supposed to be affected by the health care law, but insisted it was.

Another area of the law that still rankles Mills was how it affected Mills Health Works. In a way, Obamacare enshrined into law the use of company wellness and prevention programs: it allowed employers to reward or penalize workers up to 30 percent of healthcare costs depending on participation in wellness programs.

However, the ACA levied some major restrictions on how programs like Mills Health Works could operate.

According to the Department of Labor, the law “generally prohibit[s] group health plans from charging similarly situated individuals different premiums or contributions or imposing different deductibles, copayment or other cost sharing requirements based on a health factor.”

So, companies could no longer tie premium reductions or other rewards to specific health outcomes — only participation. For example, you couldn’t provide a reward or other financial incentive related to a smoking cessation program based on whether or not the participant actually stopped smoking.

Mills said that Obamacare robbed his program of the ability to deliver a financial boon to the company, and a positive influence on the health and fortunes of its employees.

“It didn’t gut the entire incentive program that we put out there, but it made it easier for getting people out of what they needed to do,” he said. “Obamacare made it much more difficult to give people the incentives.”

Instead of the ACA mandating employers to use the set of health indicators used by Fleet Farm, Mills said that the government should give companies space to devise the programs they want.

“I believe that a plan like this would work at a broad variety of companies and I would personally promote it,” Mills said, “but would I use force of government to mandate it on a company or individual? Absolutely not.”

“Would I create the conditions in D.C. when people in their own free choice could put plans like this together for employees and employees’ families? Yes… What we should be doing is creating a health care economy that is more open for plans like Fleet Farm’s to be successful rather than penalize us.”

Those conditions, Mills said, should include allowing the purchase and sale of insurance across state lines, greater use of high-deductible plans, and promotion of health savings accounts. Those ideas, taken together, constitute the foundation of today’s GOP orthodoxy on health care reform.

The Stewart Mills legacy: unclear

Earlier this year, the Mills family sold their business to KKR, a New York-based private equity firm that specializes in buyouts, for a reported $1.2 billion.

Mills stresses that he was against the sale, and said he remains somewhat bitter about it. He says he is not sure what the current state of the benefits program is for the roughly 6,000 Fleet Farm employees working for the company in Minnesota, Wisconsin, North Dakota, and Iowa.

Fleet Farm declined to comment for this story, and attempts to reach employees were unsuccessful. It’s unclear how, or if, the program that Mills devised remains in place.

Regardless, as his second challenge to Nolan ramps up, Mills — who has so far devoted much time to national security issues — said health care will be a central feature of his campaign. Like he did in 2014, he will use Obamacare and his experience at Fleet Farm as a springboard to attack Nolan, who supports Obamacare.

Mills was reluctant to say how exactly he’d apply the lessons he learned at Fleet Farm to federal health care policy, if he were to win in November.

“Is there a master strategy?” he asked.

“The strategy is to get government out of the way.”