When the Senate passed the farm bill this month, lawmakers quietly tacked on a multibillion-dollar provision to extend the nation’s troubled federal flood insurance program after Congress failed to reform it after a year-long effort.
The extension, authored by Sen. John Kennedy, R-La., reauthorizes the program until the end of January and will keep it up and running through the most intensive part of the hurricane season, which lasts until Nov. 1.
Forecasters at Colorado State University this week predict four hurricanes will strike the United States this season, one of them Category 3 strength.
Kennedy said the short-term extension is critical to getting states through the summer storm season.
“This doesn’t mean we can’t continue to work on the reform bill,” Kennedy, whose state experiences frequent flooding, told the Washington Examiner. “I just wanted to help with belts and suspenders.”
If history provides any hint of what will happen in January, however, then the flood insurance program is likely headed for another “can kicking,” which is a term used when lawmakers punt on reforming a program and instead extend it without changes.
The current authorization had already been extended in September, December and February and again in March while lawmakers struggle to write a multi-year reform bill.
“We’ve been negotiating for months now,” Sen. Mike Crapo, R-Idaho, told the Washington Examiner.
Crapo is chairman of the Senate Committee on Banking, Housing and Urban Affairs. The panel is in charge of reauthorizing the National Flood Insurance Program, which provides “affordable insurance” to property owners living in areas at risk for flooding.
Crapo has been trying to cobble together a multi-year, bipartisan reauthorization bill, but has been unable to bridge the divide on how to reform the program.
Many Republicans would like to shift flood insurance to private insurers, which they believe would reduce costs and shelter taxpayers from an ever-increasing financial burden.
The NFIB is insolvent thanks to cost exceeding premiums to the tune of $1.4 billion annually, according to the non-partisan Congressional Budget Office. The vast majority of homeowners in flood-prone areas pay $420 to $1,330 annually and most coastal rates do not account for damage from waves, for example.
The program was about $30 billion in debt as of last fall, following years of significant flood and hurricane damage that required borrowing from the Treasury.
In October, President Trump signed a disaster relief bill that forgave $16 billion in debt, which taxpayers must now absorb.
Reform-minded lawmakers have been eager to overhaul the program and end taxpayer bailouts. Privatization, they believe, would help achieve reform.
A House-passed bill includes language that would make it easier for private insurance companies to compete in the flood insurance market.
But Democrats and Republicans from coastal states have been reluctant to endorse the idea because they believe it could lead to higher premiums and exclusions for some homeowners.
“It’s not like we are renegotiating everything,” Crapo said. “It’s the issue of how we deal with efforts to put more private sector activity in.”
Senate Democrats have been staunchly opposed to privatization, but Republicans are also wary of the plan, especially those who represent frequently flooded areas that might be vulnerable to getting hit with much higher rates or even exclusions.
“I’m all for privatization so long as it doesn’t undermine the integrity of the program,” Kennedy said. “You can’t let anybody, including but not limited to private industry, come in and cherry pick the best risks.”
