As a survivor of a rare type of carcinoid cancer that required expensive, cutting-edge treatment, Ruth Gerdes knows firsthand the importance of good, affordable insurance.
"President Obama spent a lot of political capital and will spend a lot of taxpayer money to make sure people can have good health coverage if, heaven forbid, like me, they ever need it," she said. "But there seems to be a level of hypocrisy in the Administration when it comes to other kinds of insurance."
The disconnect Gerdes is referring to is crop insurance, which has come under heavy attack by U.S. Department of Agriculture (USDA) in recent months. USDA officials are pushing a $7 billion cut in crop insurance spending—a move crop insurers and farmers fear will disrupt coverage and service while harming the thousands of workers in the crop insurance business.
Farmers and ranchers buy crop insurance to protect themselves from bad weather and slumping market conditions. And they've been buying the policies in droves lately—nearly 1.2 million policies were written last year.
Gerdes got into the crop insurance business in the early '80s after her family farm in Auburn, Nebraska experienced back-to-back massive droughts.
"Back then, farmers didn't want to buy crop insurance," Gerdes explained. "What coverage you could buy didn't always work well for farmers, and many agents weren't much help."
Her experience wasn't isolated. Growers from coast to coast shunned crop insurance because of its expense and poor performance.
"Even if you had coverage, there were no guarantees back then that you'd collect damages in a timely fashion. There was a sea of paperwork, and lots of producers felt like insurance companies were working against them, not for them," said Ronnie Holt, a crop insurance agent from Lubbock, Texas and current chairman of the Crop Insurance Professionals Association.
Without proper insurance coverage, farmers were turning to Congress for disaster assistance on a regular basis, and that, Holt says, prompted an overhaul of the insurance business.
In 1996, crop insurance was revolutionized when insurers developed and the government approved a new kind of policy, called Crop Revenue Coverage, that protects against fluctuations in a grower's revenue. Four years later, Congress improved its partnership with crop insurers with a new law that provided aid to growers, which helped higher levels of crop insurance become more affordable.
These events enabled the government to leverage a small investment into a tremendous amount of coverage, thus reducing taxpayer exposure by shifting risk to private insurers. Last year, the government was able to parlay $6.4 billion into more than $80 billion in protection for growers—a spread that is projected to be even greater this year.
Ironically, the USDA championed these changes in crop insurance and for years has encouraged insurers to expand coverage into new crops and states outside of the Corn Belt.
"Now they're pulling the rug out from under us," said Holt, who is scheduled to appear before the House Agriculture Committee at a hearing on May 17.
"The crippling cuts would dramatically change the way companies and agents do business, potentially limiting future insurance options for farmers and certainly harming rural economies;" he explained. "Worse yet, it could harm producers' ability to get bank loans since crop insurance is used for collateral."
This hasn't been lost on lawmakers or farmers, who have come to the defense of crop insurers.
In a letter last month to Agriculture Secretary Tom Vilsack, Iowa's members of the House of Representatives wrote: "We know you, as our former Governor, understand the gravity of the situation to Iowa. Crop insurance is a key safety net that underpins agriculture, one of Iowa's primary drivers of economic growth and opportunity."
On April 9, a similar letter protesting cuts was sent by the American Farm Bureau Federation and associations representing the corn, soybean, wheat, rice, dairy, sugar, peanut, and barley industries.
In that letter, the farming community asked Vilsack to abandon proposed cuts and "allow Congress to address this issue legislatively in order to preserve the budget baseline."
Will the USDA listen? Gerdes says that's still unclear, but she hopes it will.
"For the past year all we've heard out of Washington is how important it is to have affordable and widely available health insurance," she concluded. "Well, crop insurance is a model for availability and affordability, and in farm country, it's arguably just as important to farm families as health coverage."
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