Ed Boyle usually looks to the sea for approaching disasters. But the latest one came in his mailbox.
The Vietnam veteran was billed $37,131 for federal flood insurance in November after paying about $400 annually for the past 16 years on his beachfront duplex in North Topsail Beach, N.C.
It would be "insane" to pay it, by his reckoning. His policy covers a maximum of $250,000 in water damage, an amount the burly beachcomber would surrender within seven years by submitting his payments.
"I'm not nuts," said Boyle, though he won't say as much for federal officials. "I'd say they lost their minds up there."
That letter illustrates the challenges lawmakers face as rate increases take hold under the Biggert-Waters Flood Insurance Reform Act, a sweeping piece of legislation that passed overwhelmingly in 2012 to the applause of fiscal conservatives and environmentalists both.
Now stories of mind-bending price hikes, combined with widespread fear that they'll spread like a contagion, are driving many lawmakers to call for a halt to the premium increases, which seek to phase out decades of discounted insurance. Those low rates, and climbing flood losses, overdrew the program, which is $24 billion in debt. The rates also encouraged construction in areas that flood, many say.
As the Senate nears a vote to eliminate the meatiest provisions of the 2012 law, experts and advocates across a broad political spectrum say something's missing: a solution.
Ideas that strike a middle ground between keeping the old suppressed rates and embracing wildly inflated ones haven't entered the debate, observers say. A variety of groups, ranging from free market think tanks to environmentalists, say tailoring the price hikes to meet the financial ability of policyholders could protect both impoverished homeowners and the National Flood Insurance Program.
So far, it's been an all-or-nothing debate. A group of senators, now appearing to number more than 60, is aiming to block most of the rate increases under Biggert-Waters. They fear the hikes could financially cripple constituents, kill home sales and drive policyholders out of the program.
"We've heard estimates across New York that would just break your heart," Sen. Kirsten Gillibrand (D-N.Y.) said this week.
What's being fixed?
But others wonder why lawmakers aren't pursuing what academics describe as an obvious answer: trimming the rate increases for those who can't afford it, while charging real risk rates for those who can.
"You'd think if the issue was really affordability for low-income residents, you'd tackle that directly," said Carolyn Kousky, an expert on flood insurance at Resources for the Future. "And if that's not the issue, what precisely is the issue? Maybe it's concern that the rate changes are too abrupt. I haven't seen a good definition of what Congress thinks the actual problem is."
She and Howard Kunreuther, an expert on risk management at the University of Pennsylvania's Wharton School, met with several congressional staffers this fall after proposing a voucher system that would provide loans to low-income policyholders for elevating their homes. The vouchers would also offset some of the insurance costs for those families.
They found that a family that earns $50,000 could see its annual flood premium drop from $4,000 to $520 if the government gave it a $25,000 loan to raise its house 4 feet. The 20-year loan would be paid back at a 3 percent interest rate. In this scenario, the family wouldn't need a voucher because it could afford the loan payment and the insurance premium, which would fall because the risk of flooding was decreased. Its annual cost for both would be $2,200.
The government pays more to help families in higher-risk areas, like those along the ocean. In that scenario, a $55,000 federal loan to raise a home 4 feet could reduce the family's insurance premium from $18,550 to $6,700. The family would pay a total of $2,500 for the loan and flood insurance, while the government would provide an annual voucher for $7,860.
Even with that expense, the government would save money by reducing its exposure to flood loss, according to Kunreuther. "You save the government an enormous amount of money in the process, an enormous amount," he said.
How did the congressional staffers respond to the idea?
"They said, 'That's interesting, [but] we're just going to try to get rid of Biggert-Waters,'" Kousky said. "They weren't interested at all."
Support for a blanket delay
There are reasons to pursue a blanket delay of most rates, according to a Senate aide and others on both sides of the issue. It's probably the fastest way to appease homeowners' fear. It might also avoid negative impacts on the housing market, which could suffer if buyers are concerned about purchasing a home that might see rising insurance prices.
The last concern about vouchers is political.
"When you start talking about that, it's taboo language for some of our Republican friends," the aide for a Democratic senator said.
And an income-tailored approach, whether it's a voucher program or something else, faces some of the same problems that drove lawmakers to seek the rate delays in the first place: It's unclear how many people in the flood program will see their premiums rise, let alone which ones would need a voucher.
Others say members of Congress are conveniently sidestepping the hard work of designing public policy -- to preserve their careers.
"Instead of Washington being smart enough to figure out how to target this reform for those that most need it, they're having a big overreaction as they go into an election year to help senators and congressmen who are up for re-election," said Jimi Grande, a senior vice president and lobbyist with the National Association of Mutual Insurance Companies.
Sen. Robert Menendez (D-N.J.), who co-authored the bill to delay much of Biggert-Waters with Sen. Johnny Isakson (R-Ga.), hopes his legislation will receive a procedural vote next week. It would impose a four-year delay for all rate increases except those on second homes, businesses and repeatedly flooded homes.
Boyle, who fears the bank could take away his home in North Carolina for failing to have flood insurance, is rooting for passage of Menendez's bill. But he'd be happy with a voucher program, too.
That's better to him than the other options: having a premium he can't afford or being without a policy when the next storm strikes. It's not like it won't happen. Superstorm Sandy caused $10,000 in damage to his stilted house.
Who paid for it? The federal flood program.
"I understand I've been subsidized by the taxpayers," Boyle said. "But I didn't start that game. It wasn't my idea."