Ammlung: On insurance, we're between a flood and a hard place

Many people whose homes were destroyed by recent hurricanes didn't have flood insurance. It's not that most didn't want it. Flood insurance was either too costly, or unavailable.

Insurance premiums are pooled with those of other policyholders. This pool allows claimants to receive payouts larger than what they'd paid in. Ideally, in any given timespan, only a few people will make claims against their policy; outlays are replenished by incoming premiums.


But if you live in a flood zone, work in a dangerous occupation or wreck your car, it's harder to obtain affordable home, life or auto insurance. Actuarial analysis "flags" you as likely to make more claims, for higher amounts, than will other people. Insurance companies see you as high risk: "money out the door," rather than "money building up the pool" (and the profits). The more high-risk policyholders, the greater probability that the pool will be drained.

Even the most ethical insurance companies aren't charitable nonprofits. They also can't print money. To cover high payouts, they charge high-risk people more; limit their coverage or drop them. Having multiple major disasters, like hurricanes Harvey, Irma and Maria, means simultaneous payouts to thousands of claimants. That drives premiums ever higher.

Government policy sometimes makes matters worse. The government tried to equalize federal flood insurance costs in areas where private flood insurance was unavailable. It artificially lowered premiums in the most vulnerable locations, thereby encouraging (or not discouraging) more building there — by greatly overpricing coverage for homes built in lower-risk locations within that zone.

The upshot of all this is that people who need insurance most may be least able to obtain it.

I thought about this in relation to health care debates. Like flood, life, and car insurance, health insurance is largely driven by actuarial analysis of risk. We may make a major claim on those other policies, though, a handful of times in our life. But health care has become a huge, for-profit industry; and health insurance is essential to paying for almost every aspect of it, from routine to chronic to catastrophic. That's a problem.

Other forms of insurance primarily reimburse for repair or replacement of things. Things can be replaced, or even done without. Health can't. Lives can't. And some people have serious medical conditions; they need large, often-repeated payouts. From an actuarial and business standpoint, they're "money out the door." But human decency demands we treat them better than that!

Providing adequate, continuing coverage for them — especially without raising their rates or having the company go belly-up — is enormously challenging. More so than with any other form of insurance, medical insurance demands a very large subscriber base, principally comprised of young, healthy individuals so that the funding pool stays filled. One reason many health exchanges collapsed is because too few healthy people signed on; the penalty for opting out is much too low compared to premiums and co-pays.

That's why a single-payer system looks appealing. By covering everyone and being funded (in part) by everyone's taxes, access to health care theoretically isn't held hostage to actuarial tables, small subscriber pools and ruinous rates.

But as with federal flood insurance, things go awry. In an article about Medicaid in The Agenda, Chris Pope writes: "The system was intended to offer the most help to the poorest states … . But in practice the wealthiest states have … received the lion's share of funds." And even in rich states like California and Connecticut, family physicians must often limit the percentage of Medicaid recipients in their practice to stay in business; Medicaid reimbursements don't cover their overhead. Some people finally have insurance — but nobody will accept it.

California has proposed a single-payer state system based on Medicaid, though it's projected to more than double the state budget. Sen. Bernie Sanders' "Medicare for all" proposal is so expensive that one projection shows the federal budget barely able to fund anything beyond health care, Social Security and debt interest payments.

We may be between a rock (or flood) and a hard place. My compassionate side leans toward single-payer. My analytical side fears that such a system is ruinously expensive, and not just financially. I hope that wise, prudent and compassionate minds will propose a better way forward. We need it. But whatever we do, be forewarned: There is no such thing as "free" health insurance.

Cathy Ammlung is a pastor in the North American Lutheran Church and a resident of Sykesville. You can contact her at