Most of the major Patient Protection and Affordable Care Act (PPACA) product design and underwriting rules are really here now, especially for the larger employers that already have to think about the PPACA employee counting rules.
For worksite and voluntary benefits sellers, for now, at least, the effects of PPACA on their market seem to be small, hazy or positive.
Executives from Aflac Inc. (NYSE:AFL) mentioned changes in health policy in Japan, where Aflac is a major seller of cancer insurance and medical insurance, when they went over first-quarter earnings. They mentioned the effects of PPACA on U.S. sales of supplemental products just once.
Executives from Unum Group Corp. (NYSE:UNM) talked cheerfully about the effects of PPACA on the voluntary business at the company’s Unum US and Colonial Life units.
Aflac is reporting $663 million in net income for the first quarter on $5.2 billion in revenue, compared with $732 million in net income on $5.6 billion in revenue for the first quarter of 2014.
In the United States, in-force premiums increased 1.8 percent, to $5.6 billion, but annualized new sales fell 1.2 percent, to $310 million.
At Unum US, voluntary benefits premium income rose 9.4 percent, to $192 million. Voluntary benefits sales grew 28 percent, to $132 million.
The Colonial Life worksite and voluntary benefits unit increased premium income 5 percent, to $332 million, and sales 7.6 percent, to $78 million.
Sales of accident, sickness and disability products increased 5.6 percent, and sales of cancer and critical illness insurance increased 11 percent.
Michael Simonds, president of Unum US described the voluntary benefits market as somewhat “harder,” but still competitive. “We still see some players out there that are looking to grow share, or, in some cases, recover some share using price as a lever,” he said.
Aflac executives said the first quarter was challenging because the company realigned its sales organization in a way that it believes will position the company for more growth in the United States in the future.
Dan Amos, the chairman, referred in passing to U.S. health system changes, saying he believes expanding distribution to access employers of all sizes “will give us more opportunities to leverage our brand and have attractive products in the portfolio in an ever-changing health care environment.”
Simonds said employers’ shift toward high-deductible plans is creating gaps, and that consumers are buying supplemental health products to fill the gaps.
Steven Johnson, a vice president of products for Colonial Life, said in an interview that he has seen PPACA cause more noise in the voluntary benefits market than actual effects.
Colonial Life is still interested in private exchanges but has not seen much impact from private exchanges, either, he said.
He sees very little worker use of Web-based enrollment systems of any kind in Colonial Life’s market. Instead, he says, the typical workers talks to an enroller, and the enroller enters the information into an online application system.
One trend Johnson is seeing is increased interest in products aimed at workers in their 70s.
“We’re seeing people work much, much longer,” Johnson said. “They can’t retire.”