Move the insulation away from the housing if possible. Usually, a box is built around the housing allowing 3" of clearance all the way around, then insulation is added over the top of the box. If what you have is getting too hot, an LED won't work either. The cooling fins on the led driver are not just to look cool. LEDs also have a transformer, so I have no idea what that electrician thinks they are accomplishing by changing one transformer for another.
This is a common problem with vaulted ceilings. I generally recommend mono-point track heads for this situation.