Hundreds of thousands of Americans whose homes were damaged or destroyed by flooding from Hurricanes Harvey and Irma don’t know how they will pay for repairs, rebuilding or replacement. Likewise, the nation as a whole needs a plan for fixing the deeply flawed federal system for managing and financing flood risks.

The National Flood Insurance Program insures almost five million homes and businesses against flood risks and handles related services such as flood risk mapping and floodplain management. It nearly ran out of funding before Congress voted to temporarily extend its authorization in early September. This reprieve means it can keep renewing and issuing new policies through December 8 – instead of being frozen at an inconvenient juncture.

As an expert on the structure and performance of insurance markets, I was relieved to see the program at least get patched. But I’m also concerned because lawmakers are making too little progress toward a long-overdue overhaul of the program that would make it solvent and more effective.

What’s wrong?

As House Financial Services Committee Chairman Jeb Hensarling put it recently, Congress must “finally get serious about fixing the NFIP because it is not only broke, it is broken.”

After years of struggles, its problems worsened considerably after Hurricane Katrina in 2005. Along with other flooding programs and policies, it’s failing in four main ways.

First, too few of the property owners who need flood insurance are buying it, and in some cases their coverage can’t cover their losses. That leaves too many Americans saddled with uninsured losses – which in turn puts more pressure on the government to step up its assistance.

Second, the NFIP doesn’t charge premiums high enough to cover its costs.

Third, since Congress hasn’t officially filled the gap through appropriations, the program is running a big deficit.

Finally, the NFIP is forced to cover previously flooded homes and properties in very risky places. This mandate takes advantage of taxpayers since no private insurer would voluntarily cover those properties. Without leeway, the program – and by extension all taxpayers – is subsidizing the owners of homes and businesses that have been repeatedly flooded. Representing about 1 percent of all insured properties, they account for roughly 30 percent of NFIP claims.

Separately, measures aimed at reducing flood risk and losses aren’t working. Local authorities allow too much building – and rebuilding – after disaster strikes in high-risk areas, such as barrier islands along the Southeast and Gulf coasts. And too many people are moving into those areas or staying put when they shouldn’t.

Expanding coverage

The Insurance Information Institute estimates that only about 12 percent of homeowners currently have flood insurance policies. Without vouchers – or a similar approach – even fewer Americans who need flood insurance will buy it if premiums rise.

The NFIP and other insurers will cover only an estimated 30 percent of the flood losses from Harvey’s record rainfalls and storm surges, real estate data company CoreLogic estimates.

Roy Wright, who runs the NFIP, blames premium increases stemming from the Biggert-Waters Act, which Congress passed in 2012, for a recent decline in the number of flood insurance policies purchased. He says the number of policies in the U.S. should double to 10 million.

Even more properties would have lacked flood insurance had Congress not rolled back Biggert-Waters two years later. The law was supposed to make the NFIP more self-sufficient by raising premiums and instituting other changes. Homeowners in high-risk areas pressured lawmakers to scrap it, though some rates were still allowed to rise.

Currently, people with mortgages are required to carry flood insurance only when their properties are located in high-risk areas. Like the General Accountability Office, I support extending this requirement to everyone with a mortgage.

Problematic premiums

So why doesn’t the NFIP charge enough to cover its costs? One reason is subsidies.

The GAO estimates that the government subsidizes about one in five homeowner flood insurance policies.

These subsidies tend to help the people who need it least – like those with expensive mansions in coastal areas – at taxpayer expense. (Some of the subsidies are being phased out.)

Many experts and policymakers want the government to grant a new kind of subsidy by giving the homeowners who can’t afford flood insurance means-tested vouchers to help pay for it.

In addition, experts at the Wharton School and elsewhere also argue that the NFIP miscalculates premiums, charging homeowners too little or too much. Adopting the latest technology and methods would make it more accurate.

I believe that the NFIP should also charge higher premiums for policies that cover properties that are especially susceptible to catastrophic losses from severe floods.

Forgiving the program’s debt

Unless premiums start covering the program’s costs or Congress appropriates more money for it, the NFIP will keep running deficits. It already owed the Treasury nearly US$25 billion before the latest hurricanes made landfall. Harvey and Irma could add $10 billion or more to this tab based on my broad-brush analysis of National Flood Insurance Program projections.

The GAO has argued that the NFIP should not have to repay its debt. I agree.

Private sector insurance pricing is prospective, not retrospective. Since private insurers cannot recoup losses from prior years by charging current and future policyholders more than what they owe, public sector insurers like the NFIP cannot either.

How Congress wants to fix it

Lawmakers have floated several flood insurance bills, all offering to fix different problems. So far, none of them would forgive the NFIP’s debt, as a House bill introduced last year would have done.

The House bill that Texas Rep. Hensarling supports would make it easier for some homeowners to get and pay for flood insurance. It would also help put the NFIP on firmer fiscal footing by ruling out coverage for homes and businesses that have had claims amounting to more than twice their replacement cost and other reforms.

In the Senate, there are two bipartisan bills that would instead tighten the caps on annual rate increases, forcing taxpayers to pay more for flood losses at a time when scientists expect climate change to make bouts of extreme weather more common.

While the House bill would not solve all of the program’s problems, the Senate bills fall even shorter. However, the Senate bills would substantially increase funding for flood-prevention efforts such as mapping that gauges the risk of flooding in coastal and inland areas.

They also call for boosting spending on floodplain management and risk mitigation by the Federal Emergency Management Agency, which runs the NFIP.

In practice that means the government could do more to encourage flood-prone areas to strengthen their zoning and building ordinances. As a result, more homeowners in risky areas might elevate their dwellings to make them less prone to flooding or communities could use zoning to discourage construction vulnerable to storm damage.

Many lawmakers also want to expand the role of private insurers, which underwrite only a small fraction of the flood policies now in place, by making it easier for them to sell flood policies. Some provisions in pending legislation that would do this would be helpful, but others could create problems such as allowing private companies to sell policies with substantial coverage gaps.

What about the Trump administration?

Unfortunately, the White House isn’t helping. Trump’s proposed budget would cut NFIP spending on flood mapping by $190 million. In August, shortly before Harvey made landfall, he rescinded an Obama-era executive order to establish a federal flood risk management standard for public infrastructure.

Clearly, there is no magical way to fix flood insurance while cutting what homeowners and the government spend on it.

But there are ways to make the program more sustainable and capable of doing more for the people who need help more than the affluent beneficiaries whom it now subsidizes. The Trump administration and Congress just have to be willing to do what it takes.