It would be hard to find a more unlikely pair of congressmen than the two of us to find agreement on a highly controversial issue. After working on the complicated issue of flood insurance, however, we've concluded that the way the federal government handles disasters is itself a disaster.
Drastic reform of the National Flood Insurance Program is long overdue. The program now subsidizes insurance for millionaires, puts low-income families in harm's way, and keeps people trapped in vulnerable homes by masking the true risk of flooding. The president and Congress have just extended the program for three months, creating a perfect opportunity for Congress to enact bipartisan reforms.
The NFIP was established nearly 50 years ago for good reason: The private sector had no appetite or capacity to undertake the tremendous and unpredictable risk of flooding. But over the years, the program has been seriously mismanaged. And today, technology has made it easier to manage and predict risks. So it's worth exploring ways to give private insurance companies the incentive to share the financial costs of flood insurance.
Congress has been reluctant to come to the hard decisions needed to make its system actuarially sound. Flood maps that are supposed to assign risk to properties are hopelessly out of date. Many people living in flood-prone neighborhoods continue to receive significant subsidies for their insurance premiums. (Let's not forget that many of these properties are million-dollar homes with gorgeous views of water, which should make the possibility of flooding clear.) We've taken few steps to lower the risk of flood damage. And we've failed to send the right signals to state and local governments to establish sound policies of their own. Essentially, we're hemorrhaging money only to keep people at risk.
Congress will not change this system overnight, but it can start moving in the right direction.
We must deal with the program's debt - now more than $24 billion - and put it back on a fiscally responsible path. Catastrophic storms aren't entirely to blame for this debt. Highly subsidized premiums do not send the right pricing signals. Annual premiums add up to about $3.5 billion a year, but program costs run to $5 billion - even before accounting for catastrophic losses like those from Hurricanes Harvey and Irma. The debt cannot be repaid with premiums alone.
A top priority should be to update all flood maps. It's no use pretending that the facts on the ground haven't changed. With accurate information, property owners and property buyers can better know what risks they face - and local and state governments can better address flooding.
Full actuarial rates for flood insurance premiums should be phased in. We must stop giving subsidies to some property owners and sending misleading signals to all of them. We need to be sensitive to problems this will create for some owners, especially those with low and moderate incomes. But the NFIP's subsidized rates make flood-prone properties more affordable, and we should subsidize only owners who are truly in need.
For the sake of people's health and safety, it's critical that we also stop paying to repeatedly rebuild flood-prone properties. Thousands of Americans are being paid as much as or more than their insured properties are worth. This threatens the solvency of the flood insurance program, and also keeps people living in dangerous situations with little incentive to better protect their homes or move. Strong flood-proofing standards are needed to see that repeatedly flooded properties are reinforced or elevated. In many cases, flooded homes should be relocated, allowing floodplains to return to their natural state.
Where possible, we have to mitigate flood risk. We save about $4 for every $1 spent on mitigation and disaster preparedness. More important, mitigation saves the lives of those who live in harm's way, and those whose job it is to rescue them.
Over the next three months, Congress has a unique opportunity to reform NFIP on a bipartisan, non-ideological basis. Our first job is to help the victims of Hurricanes Harvey and Irma, but we must also work to protect potential victims of future floods. Let's all go up to 40,000 feet, look down at the flooding and devastation from Harvey and Irma (and Katrina and Sandy), and act on recommendations that have been on the table for decades. Let's fix the program this time and protect our families.
Earl Blumenauer, D-Ore., is a member of the House Ways and Means Committee. Sean Duffy, R-Wisc., is chairman of the House Financial Services Committee's Subcommittee on Housing and Insurance.