AFLAC Headquarters building in Columbus, Ga. (Photo: John Disney/ALM)

The Democrats who are supporting some of the major Medicare for All proposals say they want to eliminate all deductibles, co-payments and coinsurance payments associated with health insurance.

Executives from Aflac Inc. say that, no matter how successful those proposals are, even the most generous possible public health coverage will still leave families facing major health problems with financial holes to fill, and that Aflac will continue to be in a good position to help families fill those holes.

(Related: Aflac Gives More Japan Post Deal Details)

Aflac executives talked about the Medicare for All proposals Thursday, during a conference call the company held with securities analysts to go over first-quarter earnings.

Aflac gets the majority of its revenue from selling cancer insurance, medical insurance and other products in Japan, and it also has a large worksite marketing operation in the United States.

Daniel Amos, Aflac’s chief executive officer, said that Aflac, as a company, wants everybody to have health insurance.

“We think it’s in the best interest,” Amos said.

Aflac already operates alongside a form of Medicare for All in Japan, which has had a national health system for years.

If the United States ever did have a universal government-run health care system with little or no cost-sharing, “the costs associated with it are going to be through the roof,” Amos said.

But, even if consumers facing health problems had solid major medical insurance, with no worries about deductibles or coinsurance bills, the consumers would still end up dealing with extra expenses not covered by any form of health insurance, Amos said.

“So, from our standpoint, I don’t think that’s going to change how we address these issues,’ Amos said. “I do think we will hear a lot about it with the elections in 2020. But I don’t think, when it all boils down, that it’s going to change anything in terms of what we’re selling now.”

Amos said that countries with government-run health care systems have all made efforts to control costs by adding cost-sharing or finding other ways to limit access to care.

Japan, for example, started out with no deductibles, and it now has 30% deductibles, Amos said.

Even in the United States, “we have been selling in environments, since inception, where consumers would own some type of major medical insurance,” Amos said.

Teresa White, president of the Aflac U.S. unit, said she thinks having major medical insurance increases the odds consumers will buy supplemental insurance, because looking at major medical policy descriptions helps consumers understand the kinds of expenses they could face if they run into a health crisis.

Earnings

Aflac as a whole is reporting $928 million in net income for the first quarter on $5.7 billion in revenue, up from $717 million in net income on $5.5 billion in revenue for the first quarter of 2018.

The company recorded a $3.2 billion gain associated with unrealized gains on fixed-income securities, compared with a $1.9 billion unrealized loss on fixed-income securities for the year-earlier quarter.

The company’s “total comprehensive income,” which includes the unrealized gains and losses, increased to $3.3 billion in the first quarter, from $374 million in the year-earlier quarter.

U.S. Operations

Aflac’s U.S. unit is reporting $323 million in adjusted earnings for the first quarter on $1.6 billion in adjusted revenue, compared with $337 million in net income on $1.6 billion in revenue for the first quarter of 2018.

Annualized premiums from new U.S. product sales increased 1.5%, to $340 million.

Short-term disability insurance sales increased 4.4%.

Cancer insurance sales and critical illness insurance sales fell 3.2%.

U.S. Distribution

Aflac says it had about 8,200 U.S. agents, including brokers, actively producing business in the first quarter, down from about 8,300 in the first quarter of 2018.

Spending on U.S. insurance commissions increased to $149 million, from $147 million in the year-earlier quarter.

Aflac has made a point of distinguishing between independent agents, who work with small employers, and brokers, who work with employers with more than 100 employees.

“Aflac’s agents have always enhanced their collaboration with local and regional brokers as we continue to grow broker sales, while our team of broker sales professionals have taken and made great strides in enhancing our relationship with the large broker community,” Amos said during the conference call.

“Brokers have recognized more and more that their clients need the type of products Aflac offers,” he said. “This has increased the appeal and therefore the interest in doing business with Aflac.”

Brokers have tended to close many of their sales in the fourth quarter of the year, and that trend could continue this year, Amos said.

Resources

Links to documents related to Aflac’s first-quarter earnings are available here.

Information about Aflac earnings call recordings is available here.

— Read What 4 Carriers Are Saying About Agents and Agent Comp, on ThinkAdvisor.

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