How to fix unemployment insurance, explained by the Senate’s money man

“robust as the response was, the crisis exposed the fragility of the UI system. Technically, America’s process for handling unemployment claims was built on antiquated computer systems (some written in COBOL, a language largely abandoned in the 1980s), and millions of workers endured weeks of delays in getting their benefits.

So a major priority for Congress in 2021 has to be reforming the UI system: improving its functionality and making it more generous.”

Schumer Insists on Keeping Beachfront Bailouts for Wealthy Americans’ Vacation Homes

“The National Flood Insurance Program (NFIP) run by the Federal Emergency Management Agency (FEMA) is $20.5 billion in the hole, even after Congress canceled $16 billion in debt in 2017. This financial shortfall is largely because the program does not charge nearly enough in premiums to pay for the flood damage on the properties it insures. For decades, taxpayer bailouts of the NFIP have enabled people to live and build in flood-prone areas instead of bearing the risks themselves.

In order to address this problem, the NFIP has been working on its new Risk Rating 2.0 initiative, with the aim of charging premiums that more accurately reflect the unique flooding risks of individual properties. The agency had planned to release its updated rates later this year.

Not so fast, says Senate Majority Leader Chuck Schumer (D–N.Y.). The senator’s office recently informed FEMA that adjusted premiums could have a “severe impact” on homeowners, and urged Congress and the Biden administration to work together toward “affordable protection” for flood-prone communities.”

“lots of beachfront dwellers in New York (and elsewhere) have been “unfairly” taking advantage of taxpayers. A recent study by the nonprofit research group First Street Foundation calculates that the average estimated annual loss for each of the 4.3 million properties most at risk of flooding is $4,419, whereas NFIP premiums average $981. In other words, their flood insurance premiums would have to increase 4.5 times over their current rates to fairly cover the flooding risks to these properties.”

“as a result of “direct government provision of subsidized insurance, private markets no longer generate price signals regarding the cost of living in severe-weather regions.” Suppressing the true cost of insurance encourages “private parties to (rationally) assume excessive risk, and dump the cost of living in the path of storms on others. Indeed, much of the development of storm-stricken coastal areas is due to insurance subsidies, and would likely not have happened at the same magnitude otherwise.””

Dozens Died in California Wildfires. Why Is the State Forcing Insurance Companies To Ignore Risks?

“While wildfires are a common occurrence in the Golden State, 2020 is wrapping up to be the harshest in modern history, a result of a mix of climate change, poor forest management, and citizens’ insistence on moving into wooded areas prone to fires.

Unfortunately, California seems hellbent on prohibiting market solutions from fixing that third problem. The state’s insurance commissioner has announced that the state is mandating that companies that provide fire insurance cannot drop coverage of properties within the areas affected by wildfires. This is the second year in a row he has done so.

This counterintuitive announcement by Commissioner Ricardo Lara is the result of a state law passed in 2018 that forbids insurance companies from canceling or refusing to renew policies of a residential property for a year after a declaration of emergency on the basis of the property being in an area in which a wildfire has occurred. Lara was actually the primary sponsor of the bill when he was a state senator, so while his hands are technically tied here, he’s directly responsible for this legal state of affairs.”

“The marketplace has efficient tools for discouraging building homes in dangerous environments. When insurance companies refuse to insure people who live in places prone to fire, flooding, or other natural disasters, the market is sending consumers a very important message: “It’s not safe to live here. If you make the decision to ignore this warning, we’re not going to be fiscally responsible for your choices.”

Lara’s law subverts these market signals and turns insurance into, essentially, a form of state-enforced financial subsidy. The consequences for bad outcomes are both likely and well-known. Requiring insurance companies to continue covering these properties will encourage people to continue to live and build in places where it’s dangerous. Again, 31 people died as a result of these fires, and Lara’s primary interest is making sure that homeowners apparently don’t learn anything.”

“People who decide to move to or live in areas that are at risk of wildfire should be free to do so, but it’s not the role of the government to shield them from an appropriate market assessment of the risks of doing so. California’s actions are actually fostering dangerous housing choices—ones which may lead to more deaths down the line—by getting in the way of very important market signals.”

The GOP’s ‘Across State Lines’ Idea Is Dumb

“Unfortunately for the theory, it’s based on some false assumptions.
For one thing, it assumes that there is currently a national marketplace for things like auto and life insurance. There isn’t. In the United States “national” insurance companies like Geico and Progressive are really networks of state-based companies. When you buy insurance, you’re buying it from a company with an office in your state, licensed to do business in your state. If you want a better deal from another state, you have to physically migrate to that state. But the good news is when you do, you can usually transfer your coverage fairly easily. Say you buy auto coverage in Virginia, and then move to Colorado. Geico of Virginia hands you off to Geico of Colorado with a few mouse-clicks. Happily, state legislatures have worked to make these sorts of handoffs seamless, by harmonizing their insurance laws.

Yes, some states have over-regulated their health insurance markets. Badly. So why not allow customers to vote with their keyboards instead of their feet? To understand why that’s not a sound idea, in our system, consider a thought experiment. Imagine if we let people pick their “governing state” with respect to taxes instead of insurance. I could, for example, opt to pay South Dakota’s dirt-cheap tax rates while still living, and using the roads and police, in high-tax New York. Why would New York stand for that? Why should it? Under our Constitution, state sovereignty isn’t a suggestion, it’s the law.

Notice how nobody is clamoring for interstate purchase of auto and life insurance. That’s because those markets work pretty well, and that’s because the coverage is individually owned. Most health insurance, alas, is not. Most Americans don’t actually own their health insurance. They participate in a prepaid group health benefit plan, usually provided through an employer or the federal government. By definition, such a plan isn’t portable because of who owns it (i.e., not you).

Half the U.S. population relies on employer-sponsored group health benefits, not because of state mandates, but because of federal tax subsidies for employer-sponsored group health benefits. End those subsidies, and more Americans will own their health insurance, and it’s a sure bet health insurance will begin to look more like auto and life.”

“Instead of trying to create an unnecessary “national marketplace” in insurance, which only makes Uncle Sam even more of a national insurance commissioner than he already is, states should simply streamline their regulations and promote portability via an interstate agreement approved by Congress.

In fact, such a compact already exists. Its purpose is to facilitate interstate comity in most forms of insurance. It just needs to be updated to cover health insurance. States haven’t bothered to update it because Uncle Sam is sitting on their chest.

So if we want to revive the true insurance market — a competitive, state-based market — we have to get Uncle Sam off the states’ chest and out of their business. And we have to change the tax laws to stop favoring group health benefits over true insurance.

Individual ownership is the holy grail. When most Americans own their insurance, it will be portable and affordable. But there is only one road to the holy grail, and it does not end in Washington. It ends in your state capital.”

Healthcare.gov glitches almost ruined the end of open enrollment. Is there a better way?

“In the Netherlands, people who don’t sign up for their universal private coverage during the annual enrollment period are automatically enrolled in a plan and have to pay a premium 20 percent higher than what they would have paid if they signed up voluntarily. The Dutch have achieved 99 percent coverage under such a system, which shares other features with Obamacare (like subsidies and the ban on preexisting conditions).”

A CT scan costs $1,100 in the US — and $140 in Holland

“for medical services, other wealthy countries are often paying half the price — or less — as private insurers in the United States.

The Netherlands, consistently ranked as one of the best health care systems in the world by advanced metrics, spends a quarter of what American insurers do on hip and knee replacements. A CT scan costs $1,100 in the United States and $140 in Holland. There are only a handful of isolated instances — childbirth in the United Kingdom, an angiogram or cataract surgery in New Zealand — where the cost of a particular service even approaches the US price.”

“The US is still the wealthiest country in the world. It’s home to the world’s leading biopharmaceutical industry. It tends to have the most cutting-edge treatments. All this contributes to higher prices here than elsewhere. But one big and unavoidable culprit is the lack of price regulation.

Private insurers, which cover more than half of Americans, negotiate with private providers and drug companies to set their prices. They do have some leverage (by denying a provider or drugmaker access to their patients) but it is more limited than in other countries. There is certainly significant price variation within the United States (with CT scans, for example, can cost anywhere from $250 to $1,500 depending on the location), but on average, prices for US private insurance are significantly higher than those seen under other kinds of health systems.

In some of the countries studied by the Health Care Cost Institute, like the UK, the government actually employs doctors and owns hospitals. Others, like Australia, have a universal public insurance program.

Even the Netherlands, which has a fully privatized insurance scheme, has placed more government controls on prices than the United States. Insurers there use global budgets, also common in single-payer systems, to pay providers, capping the amount they’re willing to pay per year to cover all of the services their customers need. It’s a hard limit on health care spending for the coming year, and then providers and payers negotiate prices for individual services based on that budget cap. It’s very different from private insurance in the United States, which is generally open-ended depending on how much medical care is used in a given year — and the price for those services.

Because of America’s high prices, there is a $3.5 trillion industry invested in the status quo.”

The extraordinary danger of being pregnant and uninsured in Texas

“From 2012 through 2015, at least 382 pregnant women and new mothers died in Texas from causes related to pregnancy and childbirth, according to the most recent data available from the Department of State Health Services; since then, hundreds more have likely perished. While their cases reflect the problems that contribute to maternal mortality across the United States — gross medical errors, deeply entrenched racism, structural deficiencies in how care is delivered — another Texas-size factor often plays a significant role: the state’s vast, and growing, problem with health insurance access.

About one in six Texans — just over 5 million people — had no health insurance last year. That’s almost a sixth of all uninsured Americans, more than the entire population of neighboring Louisiana. After trending lower for several years, the Texas rate has been rising again — to 17.7 percent in 2018, or about twice the national average.”

“Texas has the highest rate of uninsured women of reproductive age in the country; a third were without health coverage in 2018, according to a State Health Services survey. In some counties, mainly along the Mexico border, that estimate approaches 40 percent.”

“How Texas came to have the worst insurance gaps in the country is no mystery: It was an accumulation of deliberate policy choices by state lawmakers going back decades, driven largely by an aversion to government-mandated insurance and a desire to keep taxes low.”