Election Impact 2024: November Update
By Michael Giusti
It may not have been the 2024 U.S. elections’ “October Surprise” when back-to-back hurricanes slammed into the Gulf South this fall, but those storms certainly did introduce insurance as a talking point for the candidates.
Combined, hurricanes Helene and Milton are expected to cost insurers around $55 billion once all the damage due to wind, rain, and storm surge is added up.
Tragically, the bulk of Hurricane Helene’s damage was felt in the form of flood damage in an area of the country that isn’t accustomed to buying flood insurance, meaning that hundreds of millions of dollars’ worth of flood damage is going to end up uninsured and the responsibility of the property owners.
That reality has been enough to motivate conversations about whom should be elected to shepherd that recovery through, from the top of the ticket at president, all the way down through Congress, and even insurance commissioner. This year, more than perhaps many elections, homeowners insurance, flood insurance, and even the future of health care all hold a place in the conversation as the November 5 election quickly approaches.
Hurricane Aftermath
Wild misinformation has dominated many of the conversations following the landfall of hurricanes Helene and Milton. From tales of FEMA money misspent on migrants, to myths of federal agencies withholding aid to certain populations, false information continues to pop up.
But, misinformation aside, there are some real insurance and disaster recovery issues that elected officials must deal with following the twin hurricanes.
The first priority for many officials working on storm recovery is funding for the Federal Emergency Management Agency, as well as the Small Business Administration’s Disaster Assistance Funding. SBA has already run through its financial reserves, and FEMA is quickly doing the same.
To cover those shortfalls, President Joe Biden has called on Congress to reconvene, even amid their election recess, though no session has been planned until after the November election.
Beyond the question of federal funds, insurance industry officials are also looking at the Florida homeowners insurance market with a warry eye. Even before the double-landfall, Florida has seen a wave of insurer bankruptcies over the last several years — more than any other state.
And even if the insurers are able to stay solvent, there is still the concern that the catastrophic losses this year are going to translate into higher reinsurance rates once they are renewed in January, potentially driving up premiums for nearly every policyholder in hurricane-prone areas.
Florida and North Carolina are not alone. Many other states are also grappling with a homeowners insurance crisis that varies depending on the region.
Louisiana and Texas both also saw landfalling hurricanes, even if their losses weren’t worst-case scenarios. And while the western wildfire season has so far hasn’t been catastrophic, states like California, Arizona, Colorado, and New Mexico are still holding their breath, while states in the Pacific Northwest are fighting their share of fires.
Even in less headline-grabbing regions, severe weather such as hailstorms, derechos, and tornadoes are making homeowner’s insurance nearly unaffordable for many families in places like Iowa, Arkansas, and Ohio.
Some states are exploring legislative solutions to stabilize their homeowner’s insurance markets. Florida has tried to limit contractors’ ability to file claims and lawsuits on behalf of homeowners, while Louisiana has eased restrictions that prevented insurers from dropping long-term policyholders. Meanwhile, California is reconsidering its policy that requires insurers to set rates based only on historical data rather than future risk projections.
The long-term impact of these policy changes on insurance premiums remains uncertain, but it’s clear that state legislators, governors, and insurance commissioners will be addressing these issues in the coming years. As a result, voters’ choices in upcoming elections could directly affect their homeowner’s policies.
In terms of state regulators, insurance commissioners are up for election in Delaware, North Dakota, and Washington, with a particularly competitive – and newly contentious race in North Carolina. In most states, however, commissioners are appointed by the governor or, in two cases, by a commission.
Although homeowner’s insurance is regulated at the state level, flood insurance is a federal matter. In 2021, the Federal Emergency Management Agency introduced a new pricing model, Risk Rating 2.0, to align premiums with actual risks and claims. This model has led to significant premium hikes in many communities, sometimes exceeding 400%, sparking lawsuits from those feeling financially strained. Lawmakers in many states are pushing for changes to this policy.
Hurricanes Milton and Helene may deplete the federal flood insurance program’s liquid resources, potentially requiring action by Congress to further fund it. The program is already $20 billion in debt to the Treasury, and many lawmakers are lobbying to either restructure that debt or forgive it altogether, though it is far from a consensus.
While flood insurance itself isn’t on the ballot, the lawmakers who will shape its future certainly are.
Health Care
The Affordable Care Act remains the law of the land when it comes to health care, and it is more popular today than it has ever been, though presidential candidate Donald Trump said in his debate with Vice President Kamala Harris that he has “concepts of a plan” to change or replace it.
In a recent survey, 48% of voters indicated to the healthcare nonprofit KFF that reducing out-of-pocket expenses is one of their top national priorities. Meanwhile, 59% of Americans view the Affordable Care Act positively, compared to 39% who view it unfavorably. This is reflected in the record 21 million people who enrolled in an ACA Marketplace Plan during the 2024 open enrollment period.
Though Trump is calling for a “better healthcare” alternative, GOP lawmakers have not rallied behind efforts to repeal and replace the ACA.
Vice Presidential Candidate JD Vance has advocated potentially revamping the ACA’s risk pools, but many advocates warn that move could potentially backfire with more costly coverage for people with pre-existing conditions
For her part, Harris says she plans to defend the ACA.
Both candidates say they plan to support further negotiating for prescription drug costs.
At the federal level, the most significant decision concerning the future of the Affordable Care Act in this election cycle revolves around premium subsidies.
Introduced by Biden in 2022, expanded premium subsidies are set to expire in 2025, leaving the next administration with the choice of either allowing them to end or extending them.
At the state level, the most significant Affordable Care Act issue is Medicaid expansion.
So far, 40 states and Washington, D.C., have expanded Medicaid coverage in line with the ACA, while 10 states, including Florida, Georgia, Kansas, Mississippi, South Carolina, Wisconsin, and Wyoming, have declined to do so.
In Kansas, the Democratic governor has included expansion in the 2025 state budget for legislative consideration, though past attempts have faced opposition from the Republican-controlled legislature.
Similarly, Wisconsin’s Democratic governor proposed expansion in a previous budget but was blocked by the state’s Republican-led legislature.
Some other states, particularly in the South, are pursuing limited Medicaid expansions and seeking waivers from CMS, some of which involve work requirements. However, none of these proposals fully qualify as expansions without federal approval.
Looking ahead, Florida is considering a 2025 ballot initiative for Medicaid expansion, but no state has placed an expansion initiative on the 2024 ballot.
Medicare
If no action is taken regarding Medicare funding or spending, current projections indicate that the Medicare Hospital Insurance Trust Fund is on track to become insolvent by 2031. Medicare is funded through several sources, with Medicare Part A — covering hospital services — primarily funded by the FICA payroll taxes paid by both employees and employers. In years when payroll tax revenues exceed expenses, the surplus is added to the Hospital Insurance Trust Fund to be used during lean years.
The health of the trust fund is influenced by various factors, including economic growth, retirement rates among seniors, the number of new workers entering the workforce, and overall healthcare costs.
While projections show the fund could run dry in seven years, this doesn’t mean Medicare will stop functioning. However, it signals that decisions will need to be made soon to prevent the fund from depleting.
Some potential solutions being discussed include raising payroll taxes on high earners, increasing the retirement age from 65 to 70, or reducing benefits for certain treatments and procedures. Another option is that Congress might let the fund run out and cover the shortfall using general federal budget funds, but that would require legislative action since no current mechanism exists to support the hospital trust fund this way.
Medicare Parts B and D are already supplemented by general federal funds, but extending this to Part A would require a congressional decision. Alternatively, Congress could choose to reduce Medicare benefits to align with payroll tax revenues.
While there is no clear plan in place, it is almost certain that the newly elected president and members of Congress will need to address these Medicare issues during their upcoming terms.
Abortion
Following the Supreme Court’s Dobbs v. Jackson Women’s Health decision, which overturned the constitutional right to an abortion, many areas of previously settled healthcare law are now being debated and could be decided at the ballot box.
To date, 27 states have enacted some form of restriction on abortion access, ranging from near-total bans to limits on how late in a pregnancy a woman can obtain an abortion.
In the aftermath of the Dobbs ruling, a case in the Alabama State Supreme Court raised questions about the future of invitro fertilization after the court extended personhood rights to fetuses. As a result, several states have rushed to create specific legal protections for parents and doctors, ensuring that IVF remains legal. Federal protections have so far not made it through Congress.
Some advocates are concerned that abortion restrictions could eventually lead to limitations on certain methods of birth control, though no significant proposals have advanced. While federal lawmakers have introduced protections for birth control, these efforts have also stalled in the divided Congress.
On the insurance front, questions arise about what procedures will be covered. Due to the federal Hyde Amendment, Medicaid has never used federal funds to cover abortions. Private employer-sponsored plans often do cover abortions, but in states where abortion is illegal, these plans would no longer be able to cover those procedures within state borders.
The Affordable Care Act mandates free birth control coverage for women. However, if certain forms of birth control are outlawed in states, this coverage could also be jeopardized.
In November, 10 states — Arizona, Colorado, Florida, Missouri, Montana, Nebraska, Nevada, New York, and South Dakota — will be voting on abortion access when they cast their ballots.
Election Day and After
The decisions that voters make at the ballot box may reverberate deeply in the insurance industry. From the future of the federal flood insurance program to the stability of state homeowners insurance markets, and even contentious issues around health care and potentially the future of Medicare, the people who are elected Nov. 5 will have a huge say in how the future of insurance looks.
Presidential races get the most attention, but Congress, state legislatures, and even the lowly insurance commissioners all have huge influence when it comes to what is covered, how much coverage costs, and even whether certain programs have a future.
Michael Giusti, MBA, is senior writer and analyst for InsuranceQuotes.com
