Benefits Market Leaders Fuel Advocacy Agenda 

In this edition of the Politics & Risk podcast, The Council’s government affairs team is on-site at the Employee Benefits Leadership Forum (EBLF) with Council VP of health policy & strategy Katie King.

King oversees The Council of Employee Benefits Executives’ agenda and reveals new insights presented to the group by McKinsey, including findings from McKinsey’s brand new 2024 employer survey. The findings cover employer desire for better decision-making tools when it comes to choosing care navigation and other vendors, pressure on brokers to deliver better value in the face of unsustainable costs, and PE investments in the space. The team also discusses what potential federal budget and tax code decisions could mean for employer-sponsored insurance next year.  

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Joel Kopperud
No one’s going to be the first to leave the market, but they’re not going to be the third either. So once you see one of these big Fortune 500 companies leave, it could be a potential game changer. So that’s what has Blair and I staying up at night in DC when we’re looking at the federal budget next year and as Congress has to make a lot of really hard decisions on the tax code. Hey, everybody, this is Joel Kopperud, senior vice president of government affairs at the Council of Insurance Agents and Brokers. Thanks for dialing into the latest episode of the Leaders Edge podcast. I am joined here by our vice president of health policy, Katie King, and my colleague on the government affairs team, vice president of government affairs and political affairs, Blair Bartlett.  And we are just wrapping up our CB advisory committee meeting. It’s always the biggest and best meeting of the year for this group, and they guide all of our advocacy work on all things health policy. And Katie King leads that effort and steers them in an amazing way. And so we wanted to get her in front of our podcast listeners today and ask Katie to give us the latest on what just happened at CB. What did we just hear from them? What news can our listeners take away from this? And what were your biggest takeaways from that meeting? 

Katie King
Thank you, Joel. I think CB is a really good example of the intersection of the market and our advocacy efforts and how they’re playing out day to day. And we really rely on this group to tell us about the opportunities and challenges that they see in the business because we’re not in the business. And so the group had the opportunity to listen to a presentation by McKinsey. It was four folks from their insurance team, and they broke down the results of their 2024 employer survey. It’s annual survey. They do. And they talked about employer priorities in this current macroeconomic environment. And they also talked about what they’re seeing from a cost containment perspective. So where are employers trying to kind of squeeze cost right now? And it can’t really happen from a plan design perspective. 
They’ve shifted as much of the cost as they can to the employee. And so they’re really turning their attention toward these different vendor solutions and care navigation tools to try to make sure that they’re getting ROI, that they’re pushing their employees to utilize their care and the benefits that are offered to them in the best way possible. So it was a really interesting conversation. I think probably the top takeaways for me is that from a vendor perspective, McKinsey threw out this number that they track over 350 vendors in the benefits space. And I think one of the issues that brokers and consultants have, but by proxy employers have, is trying to navigate that space and putting together all of these disparate solutions to try to serve their people. What McKinsey is seeing is this push toward aggregation. 
So they’re seeing that from a PE, investment perspective and just a general push from employers to say how can we cobble together some of these, like I said, decision support tools, digital wellness tools, just basically resources for employees to be able to use their benefits more efficiently. So there’s this aggregation piece and investment there. McKenzie talked a little bit too about a result of their survey that said that large employers, over 500 lives in particular, are thinking about switching their broker in the next two years. And so that obviously got the attention of the CB folks. And the question was asked, why are employers considering this now? And McKinsey ticked through a couple of reasons. One of them is just inflation and one they want to assign blame to the fact that costs continue to rise, especially from a medical trend perspective. 
They also talked about HR turnover. So they’re seen specifically in the HR and benefits departments at these employer, at their employer clients, that there is a lot of turnover. So when new people come in, they want to shake up what’s been done. They’re more open to switching their, who they work with, who their broker partners are. They also talked about, in a similar vein, there’s some retirement, there’s some succession planning happening, so new leadership is coming in at some of these firms and again, wanting to reassess who their broker partners are. They also talked about what a healthy book looks like of a typical broker and consultant and talked about how there should be 15% benefits revenue, but also non medical, dental and vision revenue. 
And so they dove into a conversation around this evolution of voluntary benefits and how when you put one in place, it’s really important to make sure that it’s well communicated so that folks are actually using that benefit and that they get the ROI from that ancillary benefit. 

Blaire Bartlett
So Katie, it was a lively discussion with Mackenzie that lasted, I mean, maybe just under 2 hours with CB members asking questions and even Mackenzie getting broker perspective. And it’s helpful for someone like Joel and I who we advocate on the Hill and we kind of have to represent, you know, what our broker members do daily and what kind of information they can bring to members of Congress when they are looking at PBM transparency, you know, when they’re looking at reporting requirements. And so it just, you know, just being in that room with these market leaders is really helpful on an advocacy perspective. So it’s always, while some of this stuff goes over my head, it’s always good information. 

Joel Kopperud
It really just continues to underscore for me rising costs and how employers continue to navigate a system that makes it increasingly difficult for them to stay in it because it’s getting so expensive for employers to stay in this space. They’re looking for other avenues to retain talent and what other kind of benefits can they offer them that’s more affordable? And it’s a real risky business. Getting this. 
We always talk about in DC, what is the straw going to be that breaks the camels back when they, in terms of staying engaged in this market and just listening to them talk about rising costs always gives me a ton of anxiety because as our listeners know, one of the biggest issues that Blair and I are staring at in DC is the potential for taxing employer sponsored insurance, which is one of the main reasons companies are in this business to begin with is for the tax incentives. So if Washington starts taxing this business or capping the tax exclusion, that’s a real dangerous road to go down when companies are already struggling to stay in the business to begin with. Now they’ve got to be there to retain talent because it’s still a very competitive workforce, competitive market to retain a talented workforce. 
So they’re staying engaged. But Joel Wood, the president of the association, has a good line, which is no one’s going to be the first to leave the market, but they’re not going to be the third either. So once you see one of these big Fortune 500 companies leave, it could be a potential game changer. And so that’s what has Blair and I staying up at night in DC when we’re looking at the federal budget next year. And as Congress has to make a lot of really hard decisions on the tax code in terms of which tax cuts to stay, how do they raise taxes? How do they increase revenue? And we all know that the biggest revenue driver on the books is taxing employer sponsor insurance. And there are champions to do that on the left and the right. 
And the federal government is broke and they need money and they need it fast. So we’ve got our work coming up for us. But I listened to Mackenzie’s presentation today, and that’s the first thing I think about. I just hear again, like Blair said, it’s too nuanced for me because I’m not a market expert, but I hear the big picture stuff, which is how difficult it is to stay in the market. And it just seems like Congress doesn’t get it and they want to make it even more difficult. So it’s going to be a big year. 

Katie King
And I think legislatively, obviously, there’s a lot at stake for employers. And the point that McKinsey made is that it is a very complicated business, the benefits business. And there’s a lot of pressure on brokers and consultants, too, to now be experts on voluntary benefits, on new healthcare pricing data, on all of these different consulting aspects of their business. And so just making sure that they have tight talk tracks from a sales perspective, that they’re investing in their client service teams, that they understand all of these vendor solutions that exist and how to navigate them. It’s, a lot of the business is very complex. And I think another thing that was talked about during the McKinsey presentation was the Johnson and Johnson lawsuit, which is a good example, one for just how much is at stake for employers.  But it’s a good example for our, one of our biggest legislative priorities, which is that PBMs and TPAs should be disclosing their compensation in relation to how they service the health plan in the same way that brokers have to do. And employers have a lot at stake if they don’t understand how their pbms are compensated. So I think as McKinsey talked about, if prices and costs continue to rise, there’s going to be more attention placed on the employer sponsored system, the role employers play in procuring benefits. And so it’s going to be interesting to see how that suit plays out and how employers respond to that, just wanting to make sure that they have fiduciary standards in place and that they’re acting in the best interest of their employees.