Navigating a fragmented landscape: What benefits advisors and consultants must know

We partner with hundreds of brokers and consultants nationwide and have seen this transformation playing out in real time. The message is clear: Adapting to this new environment isn’t optional; it’s the new baseline for success.

Market backdrop: rising costs and employer activism

Let’s start with what everyone’s feeling: costs are climbing fast. Commercial health care expenses are projected to rise 9% to 10% annually through 2026. Yet, many large employers only budget for a 4% year-over-year increase, according to McKinsey. That gap between expectation and reality is more than a financial miscalculation; it’s a significant business risk.

This disconnect is forcing a mindset shift. Employers are no longer content to react to renewals and absorb cost increases. They’re stepping up as active architects of their health plan strategy, collaborating with advisors, health plans, and vendors to redefine what value looks like.

McKinsey’s data shows a clear appetite for innovation. Plan designs and payment models like reference-based pricing (RBP) that once seemed niche are now gaining mainstream traction. And among jumbo employers (25,000+ employees), interest in alternative health plans has surged 33% since 2022.

Why the momentum? Because these models have demonstrated consistent performance over nearly two decades. A recent actuarial analysis with Rollins, Inc., a global pest control company, revealed that switching to an RBP-powered health plan delivered 19% annual savings — roughly $7.7 million — without compromising the employee experience. Rollins achieved a 90% satisfaction score and a 99% claims acceptance rate, proving that cost containment and member satisfaction can go hand-in-hand.

As adoption grows, so do expectations. Employers are setting clear return on investment (ROI) thresholds, often 2:1 or 3:1, for vendor partnerships. If a solution doesn’t deliver, it’s out. For example, more than half of large employers using diabetes management programs plan to scale back or eliminate them due to insufficient returns. The message is clear: Shiny objects won’t cut it anymore. Every initiative must drive workforce health, financial performance and long-term strategic value.

Ecosystem complexity: navigating a fragmented landscape

Ten years ago, employers typically partnered with just a few core vendors, often anchored by a single administrator. It was a simpler time. Today, that simplicity is gone. Employers now engage with more than ten organizations across a fragmented and increasingly complex health benefits ecosystem.

Consultants who once had to prove value in four categories are now being evaluated across 20. McKinsey’s visual breakdown of this shift is striking. It shows how dramatically expectations have grown and how many new players have entered the space.

In this environment, employers need more than a familiar face. They need strategic partners who can vet vendors, simplify decision-making, and deliver solutions that address their most pressing business challenges.

The role of the advisor is evolving from benefits manager to benefits strategist. Those who embrace this shift will not only deepen client trust, but also become indispensable guides in a landscape that is more complex than ever.

Imperatives for advisors and consultants

The McKinsey report reinforces a belief I’ve held for years: To succeed in today’s health benefits landscape, advisors and consultants must embrace three core imperatives.

1. Measure impact by the employer’s definition of value

Success must be defined upfront. Whether the goal is reducing total health care spend, improving employee engagement, or stabilizing long-term trends, advisors need to deliver results in the language of the employer. Metrics matter, but clarity matters more. When expectations are aligned from the start, outcomes are easier to measure, and trust is easier to build.

2. Embrace cost containment

Benefits leaders must move beyond outdated pricing models. That means shifting away from flat fees and per-member charges and toward shared savings, outcome-based pricing, and reinvestment strategies. They align interests and reward results.

3. Partner with skin in the game

Employers want partners who are willing to be held accountable for performance. That includes carriers, third-party administrators (TPAs), vendors, and health plans. When financial incentives are tied to employer goals, trust grows, and long-term value is created for everyone involved.

The new standard for health benefits leadership

The role of advisors and consultants is evolving. It is no longer enough to manage renewals or negotiate rates. This new world demands a curated network of aligned partners, a commitment to measurable impact, and the courage to introduce new solutions. Those who rise to meet this moment will not only grow their business, they will help reshape the future of health care.

The McKinsey report makes one thing clear: Health care is changing for the better. Better for businesses, better for Americans, and better for the strategic consultants who are focused on making a meaningful difference.

That is why I know the future belongs to those who lead.