According to legend, when Alexander the Great was wintering in Gordium he was faced with a seemingly unsolvable puzzle, the Gordian Knot. When he couldn’t find the end of the rope to unbind it, he drew his sword and sliced it in half, producing the required ends. His ingenuity, cunning, outside-the-box thinking and audacity has been celebrated down through history. Shakespeare used the analogy in Henry V, “Turn him to any cause of policy, the Gordian Knot of it he will unloose.”
Unfortunately, no “Alexandrian Solution” has been put forward to address the spiraling cost of health care in America. What is more, the Patient Protection and Affordable Care Act (ACA) is seen by many as an even more ominous Gordian Knot than the one it was drafted to address.
<<< Gerry Thistle, vice president, leading the Vero Beach office of Willis, described the challenge facing business people, health providers, insurance companies, accountants and lawyers by comparing ACA to the Occupational Safety and Health Act (OSHA) passed in 1970. “OSHA was a sizable piece of legislation, whose main goal was to ensure that employers provide employees with an environment free from recognized hazards, such as exposure to toxic chemicals or unsanitary conditions. As lengthy as the original legislation was, the regulations that have been written in the last 40 years applying OSHA to specific situations could fill a large warehouse!”
Experts continue to wait in anxious anticipation as the regulations that implement the 2,000+ page ACA law are churned out. Also, no one is certain it will address one of the main purposes for its creation, i.e. affordability. Health expenditures in the U.S. neared $2.6 trillion in 2010, over 10 times the $256 billion spent in 1980. The rate of growth in recent years has slowed relative to the late 1990s and early 2000s, but it is still expected to grow faster than national income over the foreseeable future. Since 2002, employer-sponsored health coverage for family premiums has increased by 97 percent. Currently, health care accounts for 17.3 percent of the GNP.
In maritime tradition, a pilot was someone who was not a member of the crew but boarded the ship and guided it in unfamiliar or congested waters, particularly harbors. If businesses ever needed pilots who have familiarized themselves with the complexity and nuances of a law, it is the Patient Protection and Affordable Care Act.
Willis Group Holding PLC, a company that boasts 17,000 employees and over 400 offices worldwide, is guiding clients all over the country, drawing on its experience as one of the world’s oldest and largest broker consultants. And it would be difficult to find another company that has more involvement in stepping into challenging and troubled waters than this company, founded in 1828, who has the slogan, “Resilience for a Risky World.”
Resilience is a subject that Willis knows something about; it placed the property insurance for the World Trade Center and is partially responsible for its surging reconstruction. Not to mention, they also placed the coverage for the Titanic and the Hindenburg. According to Thistle, “I started in the insurance business as an independent agent, but my association with Willis has enabled me to bring ‘subject matter specialists’ to my clients. These are nationally recognized experts who can address the questions and concerns that their unique situation presents.” Simplifying, Thistle said, “We have a very extensive tool box, which I am able to bring to work for every client.”
Thistle continued, “Our job is to make sure clients are aware of the regulations that apply to them and that they are compliant with those regulations. That is what makes this so complex. Smart businesspeople know their business and how to run it. They also recognize ACA requires a level of expertise from professionals who have made it their business to understand the implications of this law.” One of the primary subject matter specialists Thistle calls on is Dave Levy, Willis’ Human Capital Practice Senior Vice President. Thistle refers to Levy as having the knowledge of a neurosurgeon, while he considers himself more of a general practitioner.
For instance, when asked about whether or not it is more expensive to simply pay the penalties an Applicable Large Employer (ALE, those with 50 or more employees) may face versus providing the coverage mandated by the law, Levy said, “The common misconception is the answer is ‘yes,’ but quite often the answer is ‘no’ or simply ‘not necessarily.’”
“For example, Willis’ National Financial and Analytics Team led by Jimmy Phillips, a senior reporting and analytics consultant, built a health care cost calculator,” (adding that it is currently on its 20th version), “which incorporates an employer’s benefit plans, costs, hours worked, marginal tax rate and other areas of importance to determine the cost of pay versus play. We factor in other areas such as how much are you going to compensate an individual above his or her current wage if you drop or stop offering coverage. For over 85 percent of my personal clients, the cost is higher to not offer benefits than to continue providing coverage.” It is that kind of detailed analysis that is essential when making the myriad of decisions related to ACA.
Carol Hendricksen, of Kim Ellis Insurance Services, offered another very timely angle on the question. “What this all comes down to is whether or not your employees consider his or her health insurance a valuable benefit or not. If they do, then they may leave Employer A, who chooses to take away benefits, and move to Employer B, who does offer health insurance.”
In a national and global market for superior personnel, employee benefits are often the key in elevating company morale and employee retention. In MetLife’s 10th Annual Study of Employee Benefits Trends released in 2012, more than half (58 percent) of the surveyed employees said benefits were an important retention driver. Interestingly, this was highest among Generation Y workers (born 1981-1994) at 63 percent and Generation X (born 1965-1980) at 62 percent.
Insurance & Health Care in a Changing World
Experts agree the first challenge is to convince clients “the debate is over, this is the law.” Most employers recognize that employee benefits are not a matter of “if” but “what.” Now, like flying on a commercial aircraft after 9/11, the world has changed and wishing we could go back to the way things were is not a viable strategy.
Few appreciate how much health care and the health insurance industries have changed like Gerry Thistle. Growing up in Melbourne and graduating from Melbourne Central Catholic, Thistle made a group of friends that he is close with to this day. He planned to be a high school coach and taught American history, but after a few years in that role, he felt his coaching skills might be better deployed in another arena.
In 1982, he went to work for Travelers in Jacksonville. The company was heavily into training and personnel development, which fit Thistle well. Working in the financial services arm, he later moved to West Palm Beach but credits the “real break in my career,” when he went to work for Sid Banack in 1990. “Sid transformed my business life, teaching me the independent insurance business world. I was looking for a place where my work ethic could reap the rewards I felt I was capable of.”
“Sid and I were introduced through mutual acquaintances at Travelers,” he continued, “then he called me. Though I had a good opportunity to go to work for a large company in Tampa, I went to work for Sid because he was a legend in the independent insurance industry. We began with just a handshake. Sid’s mantra was ‘the client is first, second and third.’”
Then in 2008, their company became a part of Willis. “We had grown to a significant size for a private agency, I would say in the top 5 percent. Sid had built it from scratch for 50 years, and we decided either we would acquire or we would be acquired,” Thistle recalled. “We were acquired by Hill, Rogal and Hobbs (HRH) in 2004, then in 2008 Willis purchased HRH. Though it wasn’t planned, it was perfect for where I wanted to go.”
Willis added the operational strength, as well as the subject matter specialists that he could plug his clients into from all over the world.
Thistle concludes, “Anyone who delves into ACA recognizes a) this is complex and b) I need to talk to someone who eats this for breakfast every day. This is a differentiator; Willis has something called NLRG, the National Legal and Research Group. These are highly specialized legal and compliance professionals and all they do is comb through this bill and the regulations that are being written. Then, on an almost daily basis, we are being updated with the latest interpretations and applications of the law. It is like news from the front.” Adding, “You don’t have to be an expert, but you do have to be connected with those who are.”