Floridians have a health insurance crisis. Prices are skyrocketing, and people with pre-existing health conditions are finding it impossible to get coverage. The state has plunged into the market, expanding its own safety-net plan, but since then, private insurers have only raised costs and written fewer policies. On the eve of Tuesday’s presidential primary, one Democrat has staked his candidacy on national health insurance, arguing that the best way to bring down costs and expand access is to have everyone in the same coverage pool, rather than let for-profit insurers cherry-pick the healthiest cases.
Oops, sorry — messed up a few details. It’s not health insurance; it’s homeowners insurance. The pre-existing condition isn’t disease, but hurricanes. And it’s not a Democrat, but Republican Rudolph Giuliani.
No one has more riding on Tuesday’s balloting than America’s Mayor, the summertime frontrunner who has seen his wintertime vote totals shrivel. Giuliani been camped out in Florida for weeks, making the state his pre-Super Tuesday firewall. With John McCain stealing his national security thunder, Rudy has staked his hopes on a pandering proposal: a “national catastrophe fund” that would bail out high-risk Floridians through subsidies from the rest of America.
Giuliani insurance plan drawing McCain fire
In Giuliani’s ads, the fund has become the key point of differentiation: McCain opposes it, while the other top-tier Florida hopeful, Mitt Romney, has waffled. McCain especially has mocked the plan, saying he was “not in favor of spending $200 billion a year simply for the state of Florida.”
In truth, no one knows how much the fund would cost; Giuliani hasn’t spelled out the details. But the basic concept is that a federal fund would backstop individuals and states. In some cases, the federal fund would only pay off in gargantuan events (although defining gargantuan would be a fundamentally political act). A different plan, according to the Palm Beach Post, “would establish a quasi-governmental consortium, similar to [mortgage underwriter] Fannie Mae, that would sell long-term catastrophe bonds on the private market to help finance state catastrophe insurance funds. States without such a fund would not be able to participate in the consortium.”
Giuliani has called the latter “a good bill.” Theoretically, federal reinsurance would lower the costs for each state’s catastrophe reinsurance fund, which in turn backs up private insurers, eventually lowering the prices homeowners get from the likes of Allstate or Travelers.
Plan faces both practical and political problems
A practical problem: Gov. Charlie Crist’s expansion of Florida’s catastrophe fund hasn’t stopped policy prices from soaring there — one reason that people like McCain think subsidies from low-risk places are inevitable. Florida is hurricane-prone, and the reinsurance scheme only spreads risk without fundamentally lowering it. In fact, free-market Republicans complain that shielding Floridians from the consequences of their behavior (building homes on a giant, frequently drenched sandbar) is not only a betrayal of party principles, it will enable more irresponsible behavior.
They won’t like it any better when they hear who sponsored the bill Giuliani praises: Hillary Clinton. Florida’s primary is closed to independents; Rudy had hoped to offset the bitter taste for red-meat Republicans with an endorsement from the popular Crist, who has made battling property insurers the centerpiece of his governorship. (Earlier this month, angry state officials forbade Allstate from writing lucrative auto policies in Florida, a decision a court quickly overturned.) According to Fox News — whose boss, Roger Ailes, is a major Giuliani fan — Crist had privately promised Giuliani his endorsement but backed off after the New York mayor’s dismal New Hampshire showing. Instead, Crist twisted the knife and endorsed the catastrophe-disdaining McCain.
So it appears to be lose-lose for Rudy, whose hopes now rest on snowbird affinity or an uncontrollable spasm of selfishness by Florida’s property-owning Republicans.
One final thought: what if Rudy applied the principles of his health care plan to property insurance? There would be no expansion of the federal and state role — in fact, mandates such as Crist’s would be forbidden in the name of lowering costs. Tort reform would restrict the ability of property owners to challenge abusive insurers in court. You could still get a federal tax deduction on your homeowner’s insurance, and perhaps a tax credit if you’re low-income, but if no one will write you a policy, you’re still out of luck. Those with their backs against the wall might consider a “Property Savings Account” they could fund, tax-free, for that day a hurricane blows through. Start putting money away!
David Brauer covers media, Minneapolis City Hall and Hennepin County politics. He can be reached at dbrauer [at] minnpost [dot] com.