Does ROI Matter in Health Insurance?

Ok, time for some real talk. Over the last couple of years there’s been a lot of analysis, alterations and a reframing of the way that we look at healthcare from the employer perspective. Obamacare has forced us to step back and ask ourselves what level of benefits we should really be offering to employees. Do we go for the “Full Monty” and offer amazing benefits with the hopes that we can attract great people? Or do we pursue a more barebones approach and offer what Obamacare requires us to offer? What I’m getting at is this: What do we expect to get back from our investment? What is the “ROI” for offering benefits? And Most importantly, do we need ROI to justify having health insurance?

I’m going to pose this question: “When is the last time that your company has tried to measure the ROI of your health plan?” I’m not talking about all of your benefits, like 401K contributions, or a long term disability policy, but your healthcare offerings.

Now the last few years have increased pressure to offer a competitive plan. Costs have risen and people are looking at their budgets more closely than they were during the Bush and Obama administrations. But have people changed their perceptions of ROI in healthcare? I’d argue that they have not. Firms want to reduce their insurance costs, but they aren’t trying to “prove” that they are a worthwhile investment. This leaves us in a really odd place. Almost every single large purchase is analyzed and put through the ringer at your average company. Accountants and Finance Managers like to have a tight grasp on everything coming in and going out. So why do we not do the same with health insurance? I think it’s for 2 reasons:
1. Health insurance is viewed as “out of our control”, because getting sick happens, and you can’t tell your employees not to get sick
2. You have to offer health insurance. According to both social norms, and now the law, your company has to offer your employees health insurance, or risk huge fines

Whether or not you or I think that we “should” or “should not” be looking at health benefits from an ROI perspective is a relatively moot point, the majority of people simply don’t look at it that way. However, the majority of firms do look at external products from an ROI perspective. Products like “wellness” and employee intranet sites. Products like enrollment and other HR-based insurance offerings get put through the same ringer as your monthly coffee delivery guy.

I want to pose one more question to you: “What products are worth looking at from an ROI perspective?” Should we apply the ROI principle to every business maneuver, or do some things speak for themselves? When we’re talking about employee satisfaction and performance, not even the largest of Silicon Valley firms can provide us with the algorithms to answer these questions. We have to be able to rely on our judgement and put forth a consistent strategy.