The Senate has left town and made it clear that true reform of flood insurance isn’t going to take place until September. This isn’t necessarily a bad thing—the bill needed some work—and it gives more time to make changes. After a lot of thought, I’ve come to believe that a means-tested voucher program targeted to help lower-income homeowners afford flood insurance is a good idea. Yes, in a sense it’s a spending program and even a “welfare” program. But, if designed correctly, such a program would be designed to decrease the aggregate amount of subsidy in the flood program and encouraging well-off people to buy more flood insurance.
Design first. A good insurance voucher program would be paid for entirely within the flood insurance program: a small surcharge would be imposed on most policies and the money raised from the surcharge would be used to pay for the vouchers. The surcharge would fall most heavily on higher-value homes and its imposition would be tied to a general increase in rates involved (even those on low end homes) with putting the entire program on more solid footing. The total amount available for vouchers would be limited to the total collected and, like the section 8 housing assistance program, no entitlement right to help would exist. Assistance, finally, would be a limited to the lowest income incumbent homeowners, perhaps those with homes below the median value in their area and incomes of 250 percent of the poverty level or less.
This seems to me to be a pretty sensible idea. Since the voucher program would be created as part and parcel of an overall rate increase, it would actually be part of a program to redistribute subsidies to those in need rather than raising them. Since the subsidies would fall most heavily on upper-income homeowners, who already have some choices for private flood insurance, they would actually encourage the overall growth of the fully private flood insurance market. Finally, since only people who own homes as of the date of the rate increases could take part, the program would shrink over time. It’s a good idea.
Being poor is tough and the poor deserve help from public and private sources. But advocates for the poor don’t get anywhere by stretching the truth. OOTS’ previous review of the game “Spent” is right to point out that nearly any version of it gives one an unremitting run of bad luck (with almost no good luck to outbalance it) but it also fails to mention that the game simply gets a lot of things wrong:
- Only one social assistance program—food stamps—is mentioned. Since the hypothetical person in the game has children, they would qualify for Medicaid in most places and thus would pay little or nothing for healthcare. Although waiting to see a specialist could be difficult. Likewise, the cost of college courses can always be financed and, in many cases, there are grants for some or all of the cost. Since the person is working full time, they would get an earned income tax credit and thus “pay” a negative tax in the long run rather than the 15 percent marginal rate on the first dollar of income the game imposes. There is also a lot of non-entitlement help available including section 8 vouchers (although the waiting list for them is long in most places), public housing (much of which is pretty decent since large projects have been torn down, although again, there are often waiting lists). There are a few non-entitlement programs—commodity food distribution for example—that are pretty easy to get into and might be realistic to assume one could be in during the first month.
- Some of the choices are hugely unrealistic: for example, the player has a choice between letting his/her child go hungry and paying for school lunch. Even in the wealthy area where I live, I can’t imagine that there’s much stigma attached to doing this: 10 percent of kids at my local school get it and my wife who taught at a 25 percent free-or-reduced price lunch school tells me that there was no stigma there either. This wouldn’t happen.
- Both times I played I got into an auto accident where I damaged someone else’s car. In all states but one, auto insurance is required. Although auto insurance premiums should be included in the game’s calculations as a bill you have to pay, the full cost of an accident shouldn’t be unless one illegally forgoes auto insurance.
- Other costs are simply unrealistic. Unless the person in the game is renting a huge house, having combined electrical and gas bills of $250 isn’t going to happen. Also, nearly all utility companies will let you pay these bills over time. The same goes for doctor and dental bills which, universally, one can set up payment plans to deal with.
And so forth. The game is just darn unrealistic.
I’ll repeat the comment I made in a Heartland press release about the debt downgrade: it’s justified, it’s a disaster and, sorry, it’s on my own beloved Republican Party. There’s no getting around it. We played with fire and lost big time. I fully expect that we’ll lose control of the House and fail to take the White House. Despite the best map for the GOP team in a generation, I’m beginning to think we may not even take the Senate.
Until next week,
Eli Lehrer, vice president for Washington, D.C. operations