Health+Benefits the September 2012 issue

Thunder Road

The Court decision meant little to benefits innovators. They have already left their old practice in the dust.
Posted on September 11, 2012

The reason we have the Patient Protection and Affordable Care Act in the first place is because of the total incompetence of our political system and the elected officials in Washington who have failed to deal with the fundamental flaws in our healthcare system.

I can think of no better words to describe Washington than those from the Bruce Springsteen song “Thunder Road:” “It’s a town full of losers, and I’m pulling out of here to win.”

There are some good parts to the Affordable Care Act, but the sum of the individual parts adds up to backwards engineering. The villains are politicians—not the Democrats, not the Republicans, not the Tea Party—all of them together. They are all losers as far as health insurance is concerned.

The vote by Chief Justice John Roberts to uphold Obamacare was a bold move that makes diehard Republicans furious and both Democrats and Republicans nervous as it redefines the commerce clause in the Constitution. His ruling should limit the power of politicians going forward.

The vote by Chief Justice John Roberts to uphold Obamacare was a bold move that makes diehard Republicans furious and both Democrats and Republicans nervous as it redefines the commerce clause in the Constitution.

In an era ruled by ego, power and politics, Justice Roberts made the brave decision not to use judicial power to overrule the democratic process. He actually gave us an early Independence Day gift by not letting the Supreme Court define the future of our healthcare policy.

Instead, he tossed it back to the voters to shape the future of healthcare reform through the political process. This, of course, is based on the premise that political parties can work together—a long shot at best.


I really didn’t care what the Supreme Court decided because I already predicted this industry was facing drastic change. And guess what? The decision doesn’t change all that much about where the industry must go—a transition that already has begun. The winning brokerage model would still be heading in the same direction.

If Republicans win the presidency and control of the Congress in November, repealing or not funding part or all of Obamacare won’t make much difference to brokers who are preparing for the future now.

If you are not one of these brokers already, you should get to work transitioning your brokerage to thrive in the future.

Remember a time not long ago when being an employee benefits broker meant you were fat, happy and most likely rich? I have been saying for some time that the industry must change if brokers want to maintain that lifestyle.

In a 2007 white paper about the future of healthcare, I recommended a course the industry should follow to remain relevant. Below I highlight some of my key points, many have which appeared in articles I’ve written in past issues of this magazine. The Supreme Court decision does nothing to diminish their importance.

  • The industry is going to go through a complete transformation (not to be confused with change) in which “new school” brokers will be the winners, while “old school” brokers become irrelevant.
  • Winners will focus on population health management while losers focus on “great relationships, great service” and spreadsheets.
  • The distribution system will experience revenue compression, and fees will become more transparent. At the same time, critical reinvestments will drive up costs.
  • Employee benefits, payroll and human resources will converge.
  • Accountable care organizations will be a driving force.
  • Defined contribution plans will help drive efficiencies.
  • Voluntary benefits and technology will play greater roles.
  • Captives and consortiums will arise.
  • Private exchanges will compete in the market.
  • Significant consolidation will take place among brokers, physicians, hospitals and other stakeholders.


I wish I’d saved the emails, phone calls and nasty comments I heard about my “unrealistic views” of the future of healthcare. The few supporters who agreed with me also realized the system was broken and the only chance to save it—and their future—was to do what happens in all industries at some point: let capital market forces transform the way business is done.

Those stakeholders in the healthcare system who saw the future are the only true winners so far. Those now hopping on the bandwagon can also contemplate a rosy future.

A few firms are worth watching as this transformation takes place. One is Strategic Benefits Solutions, an employee benefits firm in Atlanta led by Guy Morrison. Morrison was an early believer in population health management, and when his firm was in its infancy, he hired a medical director and a very seasoned wellness director to help lead these efforts. The firm had tremendous success, grew rapidly and was viewed as an industry leader in helping employers successfully adopt and implement effective population health management strategies. Ultimately, Marsh & McLennan Agency (MMA) acquired SBS, and within one year, Morrison and his team were leading the employee benefits strategies of Rutherfoord, a division of MMA with nearly $100 million in revenue.

Collaboration Centric Solutions (C2) is another example. It was recently formed by five regional independent firms—Kistler Tiffany Benefits, McGohan Brabender, McQueary Henry Bowles Troy, The Partners Group, and William Gallagher Associates Insurance Brokers—in an effort to deliver more creative benefit solutions to middle-market employers. The members realized that the complexity of healthcare reform and rapidly rising healthcare costs called for a dramatically different business model. Under the C2 model, the firms remain independent but invest in and share data analytics and population health management initiatives. They also share staff, technology and other resources to bring to the market the best practices offered by each firm.

If you want to be on the winning side, follow the examples of SBS and C2 and start looking at the benefits terrain for what it is. Adapt!

Here are some suggestions to get started:

  • Embrace population health management and wellness as the critical drivers that actually “bend the trend” in healthcare costs. Once limited to very large clients with more than 2,500 lives, population health management and wellness are shifting to smaller customers with 100 or fewer employees.
  • Firms that specialize in serving clients with 50 to 500 lives are developing single-source solutions in which they provide employee benefits, payroll and human resource consulting to their clients. This is a key strategy in the small- to middle-market segment.
  • Fee transparency is becoming the new norm for forward-looking brokerages. The willingness to discuss fees and services gives them a strategic advantage.
  • Brokerages should dramatically upgrade their staff to include medical directors, wellness coordinators, actuaries, nurse practitioners and dieticians.
  • Captives and consortiums will become more common for aggregating lives, but employers and employees must agree to certain patient home monitoring and wellness criteria for them to be successful.
  • Accountable care organizations will become the norm when dealing with hospitals and doctors. This will affect the strategies employee benefits brokers develop for their clients.
  • Voluntary benefits will continue to play a greater role in benefits strategy.
  • Employee benefits associations (such as United Benefit Advisors, Benefit Advisors Network and ProSential) and joint ventures (such as C2) will continue to develop, providing firms greater resources, broader skill sets and more capital.


The assumption that “when there is a crisis, there is an opportunity” is very true with healthcare. As voters, we elect the politicians, so I want to tell people who criticize the system to stop complaining. Make the change this November if you feel that strongly. The entire House, a third of the Senate and the presidency are up for election.

The Supreme Court has given us a great opportunity to force change ourselves. If the political process can actually work and politicians will just work together, we can drive forward an innovative, positive transformation of the healthcare industry.

We need leaders to come from within the industry to make that transformation happen. Maybe then one day we can truly say we have the best healthcare system in the world.

At this point, there is plenty of conjecture about the impact of the Affordable Care Act. We know the healthcare reform train has left the station. What remains to be seen is which track it will take.

Maybe Springsteen says it best in his new song “Land of Hope and Dreams,” from his recent “Wrecking Ball” album. There is no turning back:

“Grab your ticket and your suitcase, Thunder’s rollin’ down this track, Well, you don’t know where you’re goin’ now, But you know you won’t be back.”

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