Affordable Care Act Expenses Create Opportunity for Aflac Incorporated (NYSE:AFL)

May 17, 2016

Randy Binner, Managing Director at FBR Capital Markets, says Aflac Incorporated (NYSE:AFL) is seeing an opportunity around Affordable Care Act expenses, similar to what the company has experienced in Japan.

Aflac is basically a Japanese insurance company based in the United States. It’s always been like that. So when you see an Aflac commercial here in the U.S., they have enough people here in the U.S. to write insurance for in the area that they pioneered: supplemental health products.

…They have a huge opportunity in this country around the potential for the Affordable Care Act to make health insurance more expensive for Americans. We are seeing health insurers exit the exchanges. The beginning of that process is quite likely happening.

Binner says Aflac got big in Japan because of the country’s socialized health care system and shrinking population.

That system is having problems. When that system has problems, people are natural buyers of the kind of supplemental health products that Aflac sells. So they have been very successful in Japan…

What does a supplement do? Well, it might help you with a copay or a deductible, or it might provide you coverage for vision or another special condition you have on cheaper terms than what you get with a government insurance plan. If the Affordable Care Act makes government-mandated policies more and more expensive in the United States, which is a possibility, then people would be more natural buyers of the supplemental products that Aflac sells.