By Lori Moylan

In the wake of Hurricane Harvey’s devastation of the Texas coast, heartbreaking images flood our television screens of families struggling to stay safe amid rising waters. It’s too early to know just how much damage Texas will suffer, but it’s already safe to say that figure will be in the billions. Congress is already discussing emergency funding, and charities across the country are soliciting funds for affected victims.

But when all the funding is appropriated, donations are in and the rest of America resumes their regularly scheduled news programming, the aftermath will continue to linger for millions of Texans. Unfortunately, for many whose homes are lost, their first line of defense—coverage sold through the National Flood Insurance Program—sits in limbo. Legislation to reform and reauthorize the federal program has passed neither the House nor the Senate, despite a Sept. 30 deadline. Even more regrettably for those in harm’s way, the fate of much-needed reform is unclear, making it even more likely that a costly disaster like Harvey could cause unnecessary damage in the future.

The House of Representatives is further along in the process than their Senate colleagues. The House Financial Services Committee in June approved legislation that makes meaningful reforms to the program, including investments in mitigation, better disclosure of flood risks, means-tested assistance for low-income homeowners, requiring the program to buy reinsurance and, most importantly, clarifying that policies purchased from the growing market of private flood insurance providers meet federal lending requirements. These important changes would not just protect communities by lowering their exposure, they would also send signals about the true risk homeowners are taking on, allowing those in flood plains to make more informed decisions about where to live.

Not only is the Senate pretty far behind in this process but the base bill under consideration by the Senate Banking Committee would reauthorize the NFIP for six years without making meaningful changes to a program that already was nearly $25 billion in debt to U.S. taxpayers, even before a single Harvey claim comes in.

Created in 1968, the NFIP is the primary provider of flood insurance United States, although an emerging market of private providers sold more than $400 million of coverage in 2016. There are a number of factors that constrain the private market from growing even more quickly, most notably that roughly one in five NFIP policies are explicitly subsidized and don’t pay rates that match the risk they face. According to a December 2014 report by the Government Accountability Office, thanks to subsidized policies, the program collected $11 to $17 billion less in premiums than was actuarially prudent over the dozen years from 2002 to 2013.

But there are other more subtle barriers that the House bill attempted to address and which the Senate bill, sadly, does not. Most importantly, the Senate bill fails to make it clear that private flood insurance is an acceptable alternative to the NFIP for the purposes of lending and continuous coverage requirements. Without making this change, the nascent private flood insurance industry will be stymied, while all risky flood properties stay in the government program.

Despite claims to the contrary, this one change would do more to put the program on stable footing and protect homeowners than any other. As Florida’s recent transition from state-provided windstorm insurance to private market competition shows, insurance companies are very interested in taking on high-risk properties, which actually provide them the highest returns on investment.

Failing to make these changes only locks those living in flood plains into the NFIP rather than making them free to choose the coverage that makes the most sense for their needs and their budgets. A recent survey by the actuarial firm Milliman found that, for those in the highest-risk zones, 62 percent of policyholders in Florida, 85 percent in Louisiana and 88 percent in Texas could find more affordable coverage in the private market than with the NFIP.

Additionally, the Senate bill fails to make reasonable changes included in the House package to move subsidized repetitive loss properties risk-based rates quickly, providing mitigation assistance along the way to reduce premium costs.

For all its flaws, the Senate bill does include a few good provisions. For example, it requires the Federal Emergency Management Agency to use the best available technology to mapping floodplains, and requires property-level data whenever possible. The bill also bulks up mitigation programs a small amount, and appropriates funds for pre-disaster mitigation, always the preferred path to make communities safer.

Unfortunately, these small measures simply aren’t enough to serve as a starting point for negotiations. Those living in floodplains, and those who subsidize them, deserve more than small tweaks in exchange for a longer-than-usual extension. The number of properties reporting repetitive losses is on the rise, and flood disasters are increasingly expensive. In 2016 alone, the federal government declared 36 disasters due to hurricanes or flooding, with four disasters topping $1 billion in damage.

It’s simply not good enough for Americans whose lives are at risk to have to live under the threat of short term program extensions due to congressional inaction. But more importantly, it’s completely unacceptable for the federal government to maintain a monopoly on their insurance options, while sending the message that it’s safer to live and work in these areas than it actually is. While it may be a difficult conversation, the results of this skewed incentive structure are obvious in Texas today. Congress would be wise to pass major reform before the next disaster strikes.

Lori Moylan is the associate vice president for the R Street Institute

Congress is set to appropriate almost $8 billion dollars for Hurricane Harvey relief

Hurricane Harvey has had a catastrophic effect on south Texas all the way from Corpus Christi to Victoria, to the Houston-Galveston area and to the Beaumont-Port Arthur area.  The area around Lake Charles, Louisiana was hard hit too.

It is estimated that more than 85,000 homes in the Houston-Galveston area were either destroyed or severely damaged.  Many of those now uninhabitable homes were not covered by flood insurance.  And a lot of the affected homeowners lost everything except the clothing on their backs.  Property losses are in the billions and billions of dollars.

Now Congress is set to appropriate almost $8 billion dollars for Harvey flood relief.  The problem is that FEMA is about to run out of money.  That $$8 billion is just a drop in the bucket for what is really needed.  It’s money the Government does not have and Congress will have to raise the national debt limit.

Last June I posted an article on Big Jolly Politics about the proposed Ike Dam.  Of course, I am well aware that had we had the Ike Dam, it would not have affected the flooding we have experienced as the result of the rains generated by Hurricane Harvey.  But the reason I am mentioning it is because of the comments my BJP article received.

Most of the comments expressed strong opposition to the expenditure of any taxpayer funds to bail out people who are living in storm surge-prone areas since the government would be spending money it does not have.  Rather than spending ‘their’ money on the Ike Dike, they suggested the people at risk purchase flood insurance which, by the way is largely subsidized with taxpayer funds.  Most indicated that when you buy a home in a flood-prone area that’s a risk you have to assume.  One jolly BJP follower even suggested I move to the Woodlands.

Here are two problems to take into account.  First, Harvey showed us that all of Houston and the surrounding areas are flood-prone.  Second, most of these now displaced homeowners of the 85,000-plus homes that were destroyed or damaged had no idea they were buying homes within a flood-prone area.   That is why many of them did not buy flood insurance.  Shame, shame on them!

So now we have well over 100,000 people from Corpus Christi to Lake Charles that are left with only the clothing on their backs.   Sure, they will be able to pick and choose from piles of used clothing donations and the Red Cross will provide them with some funds for temporary shelter.  The Salvation Army, churches and some charities will also help out.  But the bottom line is that they need way more assistance and only the government can provide that.

So to all you jolly BJP followers who oppose spending taxpayer funds the government does not have on people who bought homes in flood-prone areas, I ask … do you still feel the same way?  If your answer is ‘yes’, then you guys either do not understand the plight of Harvey’s victims or else you just don’t give a rat’s ass.