Flood insurance by the government, but no public option

Originally published in MedPage Today

by John Gever

This meditation was evoked by the prospect that my basement could be filled with E. coli-laden mud next week.

I live within a few yards of Wheeling Creek, a tributary of the Ohio River that drains about 250 square miles of northern West Virginia and southwestern Pennsylvania. This week has brought temperatures near 70 degrees, melting the enormous snowfall that hit the region last month. Because this had been predicted days ago, the likelihood of flooding has also been well known for days.

That prompted my wife to remind me to pay the flood insurance bill, due next Friday but forgotten (by me) in a heap of unsorted mail.

Flood insurance is a wonderful thing when your house sits in a 25-year flood plain. Actually, Wheeling Creek tends to flood more frequently than that. The last time was in 2004 when what was left of Hurricane Ivan dumped 10 inches of rain in a day or two. Just about every home in my neighborhood got a new furnace and water heater, thanks to flood insurance.

I buy my flood insurance through State Farm but the company is just a sales agent. Flood insurance is actually a federal program.There is no way a private company could possibly finance insurance for homes in flood plains that do flood regularly, at least not with premiums that homeowners could possibly afford to pay.

It costs about $1,000 per year for my house. That’s nearly twice what we pay for the regular homeowners policy, but then the risk of flooding here is greater than the risk of fire or other calamities. Thus, I felt a sense of relief when I dropped off my check at the agent’s office, knowing that I won’t have to pay a whole lot more if I come home next week to a stinky mud lake in my basement.

Thousands of homes in this area face the same or worse risks from this weekend’s flooding that my neighborhood does. Across the country, millions of people live in flood-prone areas. I don’t know what proportion have bought flood insurance, but I bet it’s also in the millions.

This is not like fire insurance; most houses, wherever they are, don’t burn down. But most houses in flood plains do eventually get flooded. Payouts are inevitable.

In that way, flood damage is a lot like human sickness. Everybody requires healthcare eventually, just like every house in a flood plain is going to get flooded.

Here’s another similarity. The private insurance industry can’t provide affordable health coverage for a large minority of people, just like it can’t afford to provide flood coverage to the homeowners at risk for flooding.

The federal flood insurance program has been in place for decades without much controversy.

But when a public insurance system is proposed for healthcare — just as an option, mind you, never mind single-payer — we hear shrieks about socialism and redistribution of wealth and unfair burdens on the taxpayer.

Can we please have some consistency?

John Gever is senior medical editor at MedPage Today and blogs at In Other Words, the MedPage Today staff blog.

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Comments

westeasterly
The other point is that before the federal flood insurance program there was nothing. In heathcare, we already have a world-class, incredibly high quality system. It has its flaws, as does every other system, but it works- and it works well. Why use the flood insurance program as an example and not medicare or medicaid? No one is happy with the programs that already exist! Patients hate them, doctors hate them, and even politicians can’t move fast enough to make cuts every chance they get. Even social security- the one truly socialist-inspired government endeavor- is headed for disastrous destruction. Here’s an idea- let’s start a whole new ill-fated government program….

Palo Alto
We have a world class, high-quality system? The U.S. ranks 54th on access or “fairness,” behind Bangladesh and the Maldives, according to the World Health Organization (WHO). We are mediocre at best on quality, based on multiple measures such as “avoidable mortality,” survival rate from major diseases and life expectancy. We are number one on cost. (I got my statistics from T. R. Reid’s The Healing of America.

Vox Rusticus
Access and fairness are very subjective notions. Access to a very inferior quality of care by a whole population hardly counts as a meaningful comparison. Neither do hyperbolic “ranking” schemes by politically-motivated and tainted organizations. Ridiculous comparisons of the USA to the Maldives or Bangladesh are just stupid and mark the speaker as having a bias, of making the USA look bad. No intelligent person would ever compare the medical care available in the USA with that of Bangladesh, and you impeach your credibility when you do so. Meaningful system comparisons should reflect comparable size populations and comparable economic development. Comparing the US to Germany, or Canada or the United Kingdom or Spain makes more sense. I could care less how well Mauritius or Luxembourg or for that matter Bangladesh and the Maldives compare to the USA; they don’t compare in any other significant way, and I very much doubt we will draw meaningful understandings of how we will improve access or overall health for our North American, highly diverse, overfed, under-exercised population of 300+ million people from what works for the great island republic of the Maldives.

Jake
I am afraid that Gever misses the point about flood insurance, and insurance in general.
We buy insurance to protect us against risk. Insurance companies are always happy to so protect us, BUT they do insist that we pay a charge consistent with the risk.
So what about flood insurance? Is it true that private insurers will not sell such policies? No, it is not true. The actual situation is that there are many people who would like to have flood insurance but find the price from private insurers too high (since their property is at great risk for floods). Some of them have exerted enough political influence to get the federal government to subsidize their flood insurance bills—that means that the rest of the taxpayers (you and I) who do not need flood insurance are being forced (through their tax payments) to help pay the insurance bills of those who are at high risk for floods.
If the federal gov’t did not take on some of the risk (by subsidizing premiums), then the homeowners would do one of the following:
1. Go without insurance (ie. be self-insuring) and accept losses that occur.
2. Buy insurance at a (higher) price consistent with the risks.
3. Reduce their risk, by such things as elevating their property, building dikes around their property, selling their property and buying property elsewhere with a low flood risk, etc.
Do we buy flood insurance expecting it to protect us when there is a hard rain the next day (2 of 3 inches) that dumps enough rain on the roof to exceed the capacity of the gutters (ie. eave troughs) and damage the facings and siding? Do we buy flood insurance expecting it to protect us when the roof leaks due to that 2 or 3 inch rain? Do we expect to have flood insurance to protect us against any of the other normal maintenance expenses associated with home ownership? Of course not. We budget for those expenses (at least if we are smart we budget for them) and depend on insurance to protect us against the large risks: tornadoes, hurricanes, etc. Statistically, these risks are known of course, but for our particular property they are unknown risks—that is why we need protection against them, and since they are Statistically known risks, insurers can determine a correct cost and protect us against them.
Do we expect insurance on our real property to protect us against pre-existing conditions? Of course not. When the weather forecast says that a hurricane or tornado or flood is on the way, no one is going to sell us a policy to protect us against that known risk (notice that it is now a KNOWN risk). We do not expect them to do so. So we need to buy the policy beforehand to protect us against those risks.
So what does this tell us about health insurance?
First it tells us that we need to buy the insurance before we need it (ie. when we have an unknown risk but when the insurer has a statistically known knowledge of our risk).
It also tells us that we should not expect to require that insurance protect us against normal maintenance expenses (eg. In the case of health insurance, the common cold, the laceration from working in the kitchen or garden, immunizations, etc., or in the case of the homeowner against the rotten windowsill, the leaking roof, the stopped up toilet, etc.)
But we do need insurance for the case where we, for health reasons need extensive and very expensive treatment for cancer, where we need very expensive treatment for injuries, etc., and where as homeowners we need to rebuild a home destroyed by fire or a hurricane, etc.).
And so, Gever, do you now understand insurance a little more?
Can we please have some consistency? We have it (read what I said, above).
Shrieks about socialism and redistribution of wealth and unfair burdens on the taxpayer are not any part of what I have said, above, and I hope that Gever will not continue to suggest otherwise.
To finish, I would like to say that I resent very much having to pay higher taxes so that Gever can continue to have me help to pay for his water heaters, when he knows that if he moved to a lower risk location (ie. higher) ground, he would not have such water heater losses.
Is flood insurance different from fire insurance as Gever states? No, it is not. The difference is that with fire insurance, I do not have to subsidize him. For flood insurance, I have to subsidize him through my federal tax payments. If you want to live in a flood plain, Gever, go ahead, but I am tired of subsidizing you.
Should I be expected to subsidize your health insurance so that you can use naturopathy, chiropractic, etc.?
I have no desire to subsidize your health insurance, or any other of your insurance bills.
Bladedeoc
And just like a single payor system your (and my) unsustainable lifestyle is subsidized by people who do not choose to live in a flood prone area. Why should someone who does not live in a flood zone pay taxes so you can live in a flood zone and not support the full cost of that choice? Similarly multi-millionaires build house after house on the beaches of the Hamptons and the barrier islands of the Carolinas fully expecting to have to rebuild every 10 or so years, fully subsidized by the federal flood insurance program. It’s only not controversial because it’s a relatively small amount of money and it’s not widely understood.
IVF-MD
The federal flood insurance program has been in place for decades without much controversy.
But when a public insurance system is proposed for healthcare — just as an option, mind you, never mind single-payer — we hear shrieks about socialism and redistribution of wealth and unfair burdens on the taxpayer.
Can we please have some consistency?
Wouldn’t it be consistency if we started phasing out the public option flood insurance so that those who choose to live in large homes near flood zones can’t use political lobbying to force the little guy who lives far from flood zones to subsidize the insurance?
Jake
My apologies. I certainly did make comments about “unfair burdens on the taxpayer.”
It is very much an unfair burden on the rest of us taxpayers to have to subsidize someone who does not think it is his responsibility to pay for the risk of his choice to live in a flood plain.
H
So if we take floods off the list, do we get to take hurricanes and earthquakes off the list of disasters eligible for tax payer handout? Why should I care about anybody besides myself?

bladedoc
Umm, unless there is some sort of Federal Hurricane Insurance (meaning the wind, the flooding is already covered above) or Federal Earthquake Insurance that I don’t know about your comment is self-refuting.
You can care about anyone you want. You shouldn’t incentivize their poor choices and you sure as hell shouldn’t take MY money to give to people YOU care about.

H
Everyone makes poor choices. After Katrina, how much federal money went into helping those people who lived below sea level? When that big quake hits LA or anyone on the Pacific rim, I certainly hope that no federal money goes to those people who chose to live earthquake prone zones. Of course there are tsunamis and tornados…no federal funds there either. At least those in the flood plain have to pay something.
“MY money to give to people YOU care about.”
It interesting that I am supposed to care about the plight of the poor doctors, whose salaries are shrinking and their debt in growing. Why should I care about YOU? What a wonderful culture we have created?

K Prasad
hmm….just because people aren’t complaining doesn’t preclude a problems existence.
You are irresponsible and live in a hazardous area…we shouldn’t have to pay for it.

Flood insurance by the government, but no public option

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