Ag Policy Blog
Chris Clayton DTN Ag Policy Editor

Wednesday 02/24/10

Crop Insurance Industry Balks at USDA Proposal

In a news release Wednesday, the National Crop Insurance Services rejected USDA's second offer for a Standard Reinsurance Agreement.

The news release came just hours after Secretary of Agriculture Tom Vilsack told a House Appropriations Subcommittee that the agreement was a fair deal. Vilsack said "rebalancing" was necessary in the industry given the rise in profits since 2000.

"You are seeing dramatic increases in the amount of profits for the companies and the agents," Vilsack said.

Vilsack added that crop insurers have had strong profits in 13 out of the last 15 years. USDA proposes to cut the industry's average underwriting gains from 16 percent a year to 12 percent a year. "We think that is fair," Vilsack said.

The crop insurance industry stated:

Although modestly less severe than initially proposed, the funding reductions for the crop insurance program offered yesterday by USDA/RMA in the latest round of negotiations to revise the Standard Reinsurance Agreement (SRA) remain excessive and unrealistic. In addition, the RMA’s latest proposal fails to reflect available reforms to the program’s business processes, oversight and quality control measures which would increase their effectiveness and reduce costs for both RMA and the industry.

“We are disappointed that RMA didn’t give much credence to our suggestions about ways to streamline and improve the important tasks that we must undertake to implement the program and protect its integrity in compliance with the provisions of the SRA. In fact, RMA went the other way, making these tasks more cumbersome and expensive, while simultaneously calling for huge funding cuts” said Bob Parkerson, President of National Crop Insurance Services.

Representatives from RMA made a presentation to the industry on February 17 about the changes expected in draft number 2, which was actually released on February 23. RMA’s offer to reduce the program’s funding by $6.9 billion over 10 years versus the $8.4 billion in the first draft was met with dissatisfaction and disappointment from the industry. The $6.9 billion would reduce financial support to the crop insurance companies by some 25 percent, and as was the case with RMA’s first proposal, these cuts would continue to put at risk the depth and scope of crop insurance services in many agricultural areas of the country.

The second draft also contained several impractical provisions that were not in the first draft, most notably a restriction limiting the amount of commission paid to agents, the option for companies to offer profit sharing, additional drug-free workplace requirements, and additional adjuster proficiency requirements.

“It appears that RMA, while giving a little bit back on the financial side, has increased the requirements on the operational side of the business causing the companies’ expenses to continue to rise. They claim to be listening to us, but it’s apparent that they didn’t take the time to read the comments we submitted to their first draft. We still have a long way to go,” said Parkerson.

Once NCIS and the industry have had a chance to thoroughly read and analyze the second draft of the SRA, they will provide written comments to RMA and make them available publicly.

The industry’s comments to RMA’s first draft, as well as facts that refute many of RMA’s position statements in its “Myths versus Fact” sheet can be found on the crop insurance industry website at www.cropinsuranceinamerica.org.

I can be found on Twitter at chrisclaytonDTN.
Posted at 9:03PM CST 02/24/10 by Chris Clayton
Comments (1)
The Hybrid Funding Vehicle needed for Healthcare Reform and Access in 2010! “The Alan Roebke (REB-key) Plan” Released: 2-26-10 Under the plan, all 47 million uninsured American’s will be covered, using this funding vehicle. At a lower government cost and better coverage, than any other proposed plan. For all uninsured income receiving adults will contribute to this funding Vehicle. As well as all U.S. employer’s which have employees without health insurance or have employees with no employer health insurance support. This plan also includes and supports self-employed individuals and families without health insurance coverage and need at least short term help. The funding will come from a minimum contribution of $25/week, from all uninsured employees and self employed, individuals without insurance or $1300/year/adult. This contribution amount will also come from unemployment benefits and other government support received! Allowing a “work day”, to earn said $25 dollars without reductions in benefits or States can contribute to the $25 for an adult or act as an employer as well. All employers will contribute a minimum of $25/week/uninsured employee ($50 for seasonal) or self- insured employees without employer support or $1300/year/employee. The State can act as an employer! The Federal government will also contribute $25/week/citizen, Man, Woman and Children without health insurance or $1300/year each. Which would include an arbitrated income cap, access review and contribution formula’s, selected by industry and or Congress. With best options and market access revealed to the insured, by the employer, insurer and HHS. Allowing the insured to include State Agency’s and non-profit advisor support in final selection and eligibility process. This means an uninsured family unit of four, will have a total of $10,400/year to purchase a private health insurance policy and start a health savings account. The funds come from the $2600/year from their two adult employers. An additional $2600 from the Federal Government for the two income generating adults and $1300 each for the two children or another $2600/year. Plus a $2600/year contribution from the income producing adults. The plan also allows a State offered health policy or plan and a Federal selected or suggested policy from HHS. Allowing the immediate start of a health savings accounts from this plan to address Dental needs. As health insurance guidelines, are worked out for this new insurance plan by Congress. This plan is operated using our present government and private payroll computer systems. To collect and transfer funds, so uninsured citizens simply have the funds to purchase private health insurance on their own or through their employer or State! The cost of this plan will be capped at $610 billion over ten years or $61 billion per year. Compared to the latest Obama plan of $950 billion or the Trillion Dollar plus plans from Congress. It’s a good number because many can contribute more than $25 and healthcare costs will drop under good governance and our need to deflate all U.S. market costs. Roebke developed this hybrid, based on the McCain - Obama view of healthcare from the 2008 campaign. Which includes the rival views of today’s Republicans and Democrats or Liberal and Conservative debate. Yet this plan addresses the fact that all Americans need health insurance at sometime and insuring all, best addresses costs. When all income producing adults, contribute to their Families healthcare needs and the plan/vehicle delivers real healthcare justice for all. Roebke also views his vehicle/plan, as a major cost cutting tool for State budgets! Allowing each State to have better healthcare coverage for low income citizens, with needed Federal help. Drafted by Alan Roebke (REB-key) Alexandria Minnesota, www.CongressionalChange.com This copyright plan or vehicle can be published as a “Letter to the Editor” or used in news pieces if source is credited! First posted on Agweb-discussions!
Posted by Alan Roebke at 7:34PM CST 02/26/10
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