Insurance companies are profiting from Trump’s threats

President Trump’s lack of action on the Affordable Care Act is forcing insurance companies to raise their prices.

During the 2016 presidential campaign Donald Trump promised to repeal and replace the law, which is commonly referred to as Obamacare. 

Though he hasn’t fulfilled that promise, he has issued further threats to pull funding from the program, which could leave companies unable to insure low-income customers.

The law, which was passed seven years ago, said that tens of millions of people would be required to buy health insurance, and offered subsidies so they could afford the expensive plans.

It was celebrated by insurance companies who anticipated a rush of new customers looking for coverage. 

But now it’s not clear what will happen with the ACA, leaving insurance companies with two options: pull out of the potential customer goldmine, or wait and raise their prices to cut losses.

The uncertainty has created a debate regarding whether or not insurance companies are taking advantage of the insecurity or are driven by circumstance to do whatever they can to stay afloat.

During the 2016 campaign Donald Trump promised to repeal and replace the law commonly referred to as Obamacare

The individual market is estimated to encompass roughly 20 million people and includes those individuals who don’t quality for subsidies but choose to buy insurance from a broker. 

In comparison about 155 million Americans receive insurance at their job, the New York Times reported.  

In order to cut potential losses from pulled government funding, insurance companies have hiked up their premiums.

Each year since the ACA was implemented companies have been raising their prices substantially, with this year seeing the sharpest increase.

Though Trump hasn’t lived up to the promise to repeal and replace Obamacare, he has replaced that instead with a new one that threatens to strip the law of any government funding to cover subsidies.

He has also said he will stop reimbursing insurers that waive deductibles and co-payments for low-income Americans.  

The Affordable Care Act has allowed some insurers to offer more generous plans to people who cannot afford them under the assumption that the government would cover some of those costs.  

Trump has yet to follow through on any of the promises, so at the moment those companies that have raised their prices are making an astounding profit. 

One example is Centene, a for-profit company is making a significant amount of money in the individual market. Another, Health Care Service Corp, which operates in multiple states including Texas and Illinois only started turning a profit this year.  

And the lack of clarity over the the insurance market’s future and the Affordable Care Act could lead to even higher insurance prices in the next year. 

Some companies are requesting rate increases of more than 30 percent.  

And the lone ACA insurer in Iowa has requested an increase of nearly 60 percent on average for 2018 to cover any potential losses. 

‘Just as they’re getting their footing, they have the worst thing that can happen to an insurance company: uncertainty about the business model,’ Dr Stephen Ondra, a former insurance executive who worked in the Obama administration told the New York Times.  

Part of the increase is because the administration has threatened to lower or completely end the penalty that people face for not enrolling. 

Companies must set their final plans and premiums for the year by late September, and can choose to leave the ACA in following weeks if they cannot handle the confusion.  

If something isn’t done to address the uncertainty many companies likely will leave the plan because they will not want to lock in prices for the next year without the guarantee of government funding.