This is the final part of a multi-part series on advisers who switched from retirement to the healthcare space. Read the rest of the series here:
- Part 1:
Career moves: Why these retirement advisers shifted to healthcare - Part 2:
Career moves: Navigating conflicts of interests as a healthcare adviser - Part 3:
Career moves: How epiphanies led these advisers to pivot
Health benefit brokers and advisers who cling to outdated models in an increasingly transparent marketplace with greater fiduciary oversight will vanish, much like what happened on the retirement side 20 years ago.
The convergence of health and wealth expertise has become table stakes for advisers who want to remain relevant, observes Dave Chase, co-founder and CEO of Health Rosetta.
"Visionaries who tackle the healthcare crisis head-on will not only grow their practices exponentially but deliver what workers truly need: protection from the healthcare system that's systematically emptying retirement accounts before they're even funded," he says.
The C-Suite is tired of hearing that brokers will do better with group health insurance rates at renewal, explains Barbara Delaney, founder of StoneStreet Benefit Advisors. "We have to change the system and mindset of plan sponsors and try to get better outcomes," she says.
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One effective way she has communicated this message is likening corporate objectives on the healthcare side to aspirational plans for retirement savings. For example, having 98% participation in a retirement plan with at least 10% of income being deferred is ideal for retirement readiness. The challenge is duplicating that result for health benefits.
"How do you achieve that on the health side and get people to take care of themselves better?" she asks. "It's not that easy… But when I talk that language, plan sponsors are more than willing to give me the opportunity."
There are definitive steps toward real success that Delaney says employers can take with the help of their broker or adviser. It starts with widening access to care by lowering out-of-pocket costs and encouraging visits to primary care physicians, as well as offering health savings accounts and teaching the virtues of self-care. More sophisticated approaches, of course, can significantly improve outcomes and bend the cost curve. She lauds Prudential for doing "a really great job" with having onsite care available to all its workers.
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A quicker cleanup
Jamie Greenleaf, co-founder of Fiduciary in a Box, is sanguine about the prospect for meaningful change. She believes that conflicts of interest and fee opacity in healthcare will be cleaned up quicker than it took in the retirement space. One reason is the Trump administration's commitment to enforcing the Consolidated Appropriations Act of 2021 (CAA). Another is employee health benefits are something everyone wants and deserves, but they're becoming unsustainable for employers to finance.
"I think the horse is out of the stable," she says of mounting pressure on healthcare advisers to do a much better job fulfilling their fiduciary responsibilities on behalf of benefit plan sponsors and participants.
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The onus will be on insurance carriers and pharmacy benefit managers (PBMs) to change their business practices, including the way they compensate brokers. Greenleaf describes the latter group as the most significant "sacrificial lambs" along the road to greater price transparency and fee disclosure.
"Once there's an understanding that everybody's doing what the PBMs are doing, it's going to be really easy to change the industry's behavior," she opines. Her hope is that doctors eventually will be able to focus on practicing medicine rather than become health insurance experts bogged down in administrivia and chasing unpaid bills.
Innovu CEO Hugh O'Toole likens healthcare rebates to 12b-1 fees on mutual funds. "To me, they're all just very obvious horrible procurement and accountability," he says. "We free up that money and it would be less difficult for people to fund their 401(k). We get to a normal inflation rate in healthcare and employers can give salary increases. It's all related. It's one ecosystem."
He predicts a huge consolidation in the healthcare adviser community in the next three years just as there was on the retirement side that will add clarity on who's capable vs. incapable. "That's where Fielding Miller, a founding partner of CAPTRUST, came from," he explains. "Merrill Lynch used to dominate the retirement space. They don't anymore."
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Noting that he has data on 9 million plan participants loaded, O'Toole cautions that anyone who's not loading data is "already archaic" and describes the entire self-insured marketplace as "wide open to the unbundling and re-bundling of healthcare."
As much as high-quality benefit consultants may want to be more transparent and forward-thinking with their clients, Greenleaf believes there are probably some difficult internal discussions taking place within highly conflicted organizations. Those agencies, however, will need to pursue a different path or be held liable for continuing to behave poorly.
"I think there are employers who are going to start to demand true transparency, no conflicts and unbiased advice," she says.
O'Toole's top regulatory priority is to force the disclosure on Form 5500 of ERISA 408(b)(2) fees, which were expanded to group health plans under the CAA, "and make it clear to everybody that if you don't report it to the plan sponsor, you are going to be sued or fined by the DOL," and if it's not reported accurately, the plan sponsor will be civilly liable. He would consider that a key turning point because "what they consider disclosure today is complete nonsense."
