David Rodeck

The Health Insurance Buying Process, Part 1: Identifying the Problem

Making any sort of business investment means entering into what can be an intimidatingly complex process — and buying health insurance is no exception. Taking on a new health plan, or even just making changes to an existing one, involves reflection and research, trade-offs and backtracking and negotiating input from stakeholders with competing priorities, among other complications that can keep you and your team busy for months.

This series breaks the health insurance buying process down into six manageable steps. While you may have to revisit each step multiple times before making a final decision, understanding the formula for successful buying can help your organization move more efficiently toward your ultimate goals — keeping employees healthy and happy while maximizing your budget.

The buying process starts close to home: identifying the problem. Before you start reaching out to brokers or weighing the pros and cons of various solutions, you need to establish what it is that could be holding your business back and how health insurance could propel you toward success.

Identifying Problems

Let’s say consensus has been building among your organizations stakeholders: You need to take action. Maybe sick days and presenteeism have productivity flagging, or your employees are fleeing to other companies with better benefits. Maybe the cost of your employees’ poor health is becoming a heavier and heavier burden, or expensive benefits are going underused. There are shortcomings in your current approach, in other words. And before you can know if the benefits of offering health insurance to employees are the right way to fix those shortcomings, you need to pinpoint the issue. This kind of realization entails research, both internal and external. Here are three steps to get you going.

  1. Crunch some numbers. Whether you already have a plan or not, it’s time to start quantifying the costs of action vs. inaction. Put another way, what might not making a change cost you? According to the Centers for Disease Control and Prevention, productivity losses linked to sick days cost U.S. employers $225.8 billion a year — that’s $1,685 per employee. Or consider: How much is turnover costing your company? HR Dive reports that losing an employee typically costs a full third of that worker’s salary in lost productivity and hiring expenses. Use statistics like these as a baseline to help you understand your own problems and set the stage for comparing what it would cost to make a new (or bigger) investment in health insurance.
  2. Measure sentiment. While there are a number of parties who need to weigh in on health insurance buying decisions, don’t forget to check in with your largest group of stakeholders — your employees. What would having health insurance mean to them? Or how could a few thoughtful changes to their options take their work to the next level? Send out an employee survey asking your workforce about their benefits and what they’d like to see done differently. Where do they see weaknesses in your current offerings? What do they say would make them more productive or likelier to stay? What services are being used, and which ones are employees ignoring — and why? How many of your employees need coverage for chronic conditions? Prescription medications? Pediatric services? Before you start looking for a new plan, you need to understand how doing so might — or might not — fill existing gaps.
  3. Look around. While you may not have access to your competitors’ finance spreadsheets, having a sense of both their struggles and their benefits offerings can help with your self-assessment. If you have connections with leaders at similar businesses, consider initiating a conversation — warming these relationships up now might pay off later in the process, when you’re comparing your options. Otherwise, here’s where a broker might be able to provide you some valuable broad data or useful case studies.

As you wade into the problem identification step of the process, it makes sense to equip yourself with hypotheses, but be careful not to let assumptions cloud your vision. If what you’re hearing from employees doesn’t align with your expectations or your personal priorities, don’t ignore it. Take in all the evidence and double-check your methods before you draw your conclusions.

Moving Forward From Identifying the Problem

This early in the process, the biggest threat to a successful buying process is miscommunication, which means your goal should be to keep everyone on the same page. Misalignment on the size and scope of the problem is a key issue that could set back the buying process. If you don’t agree on what you’re trying to accomplish at the outset, it will be impossible to find a satisfactory solution.

That said, as you present your research for discussion, be careful about how you discuss changes to your current benefits offerings (or lack thereof). Don’t assume that more information is always better. Take the time to consider what is actually relevant and helpful before sharing with the rest of the team.

Once you’ve highlighted areas that need improvement and discussed how a change in your health plan offerings can address those areas, the task of avoiding miscommunication moves to budget discussions. Make sure to include any key parties for the ultimate decision when preparing your budget. Unaddressed confusion or disagreement over the budget at the beginning is another oversight that can force an organization to start the health insurance buying process all over again down the road.

Identifying the problem is just the start of any buying decision, but it’s arguably the most important step. The work you do here sets the tone for the rest of the process, so take your time to do it right.

Made your way through step one of the health insurance buying process? Keep going with step two: exploring solutions.