FEMA Health Insurance

[Welcome Industry Radar readers!]

What would happen if FEMA ran a National Health Insurance Plan (NHIP)?

OK, we looked at something like that once before, but this is in a different light.

I just found out the FEMA is responsible for overseeing the NFIP (National Flood Insurance Program) and it started turning some wheels in my head.

If you crash your car repeatedly, you can count on your insurance premium shooting up. Crash often enough and your insurer will drop you. But there's a special kind of insurance that doesn't punish you for having the same accident over and over again. And here's the punch line: It's a government program that's already left tax-payers like you on the hook for $17 billion—and counting.

If the NHIP were managed the way the NFIP is then you would see something like this.

You are required to buy NHIP but if you don't, it doesn't matter. The taxpayer will cover your claim any way.

If you do buy, you will pay a premium that is about 40% of what a traditional carrier would charge.

You are entitled to unlimited care regardless of the cost.

Of the properties destroyed by floods, almost 5,600 were worth less than what it cost to repair them.

If you are the daredevil type (think Evel Knievel), it doesn't matter. The NHIP will cover you any way.

Feel free to smoke, eat and drink yourself silly, partake in dangerous or illegal activities such as freebasing and never have to worry about getting coverage. The taxpayer will cover it.

According to a 2005 report by the nonpartisan Congressional Research Service, owners of properties that flood repeatedly receive 30 percent of the money paid out annually by the NFIP. But why should they care? There's little chance they'll lose their insurance or see premiums go up.

And if you think all this is silly and Congress will eventually kill a NHIP, then think again.

There are those in Congress who want to rein in this crazy program, but their efforts have failed, thanks in part to business and real estate lobbyists. Meanwhile, Washington being Washington, some have decided that the solution is to expand the NFIP—by covering wind damage, an idea that the Government Accountability Office says could be a fiscal disaster.

Apparently the Fannie Mae, Freddie Mac issues fail to resonate with the folks in D.C.