At a House Financial Services subcommittee hearing last week, lawmakers didn’t lack for answers. Taxpayers for Common Sense President Steve Ellis and other witnesses laid out, in plain terms, why the National Flood Insurance Program (NFIP) keeps piling up costs—and what it would take to fix it.

What they described was neither a mystery nor a new problem. It was a system doing exactly what it has been designed, and allowed, to do—rebuild in the same places, pay for the same damage, and send the bill to taxpayers.

The NFIP is the primary source of flood insurance in the U.S.—with nearly $1.3 trillion in current coverage—and until its rates are more actuarially sound (risk-based), it will likely remain so. The program also offers coverage in high-risk areas. As a result, NFIP payouts frequently exceed premium revenue—and the program leans on federal taxpayers to cover the gap.

NFIP has borrowed $44 billion from the Treasury (i.e. taxpayers) over its history. In 2017, Congress magically wiped away $16 billion of that debt to make room for more borrowing under the program’s roughly $30 billion cap. This isn’t borrowing in any meaningful sense, with a realistic plan to pay taxpayers back; it is taxpayer dollars being absorbed to cover repeated losses. And the debt continues to grow: NFIP borrowed another $2 billion from the Treasury last year, pushing the outstanding debt to roughly $22.5 billion.

As Ellis told lawmakers, the core issue isn’t a lack of information. “The question is not what to do. The question is whether we will do it.”

The hearing made clear just how much we already know. A tiny share of properties—about 1 percent—accounts for a disproportionate share of damage. These “severe repetitive loss” properties have generated more than $12.5 billion in claims, roughly a quarter of all payouts. They are well documented. The federal government has a list. And yet they continue to be rebuilt after every flood, setting up the next claim.

Year after year, more properties are added to that list—by the thousands. The system isn’t reducing risk; it’s locking it in.

There are ways to break that cycle. One is to help homeowners move out of harm’s way through buyouts. But as several witnesses noted, those efforts are slow and fragmented, often addressing one property at a time instead of entire blocks or subdivisions. The result is that many homeowners remain stuck in high-risk areas, while taxpayers remain exposed to repeated losses.

Another is to invest in mitigation—elevating homes, improving infrastructure, and reducing flood exposure before disasters strike. The evidence here is clear and was reiterated at the hearing: every dollar spent upfront saves multiple dollars in future costs. Yet mitigation remains underused, in part because of how federal budgeting works. Preventive spending has to compete for limited funds, while post-disaster aid is treated as emergency spending—easier to approve, even as it adds to the deficit. Adding insult to injury, Congressional Budget Office scoring rules count mitigation spending today but do not credit the future savings it generates.

That imbalance was part of the rationale behind the Building Resilient Infrastructure and Communities program, which aimed to direct more funding toward prevention. But the program’s recent cancellation and partial restoration underscore how inconsistent federal commitment to mitigation has been.

The hearing also highlighted a deeper problem: misaligned incentives across levels of government. State and local officials make decisions about where and how to build, including in flood-prone areas, but they don’t bear the full cost when those decisions lead to disaster. Instead, federal taxpayers step in.

Ellis captured this dynamic bluntly, noting that the federal government has been acting as “Uncle Sugar,” covering costs that others should share. If that is going to continue, it should come with clearer expectations. Communities that take steps to reduce risk should be rewarded, while those that do not should not be able to rely indefinitely on federal support without changing course.

Insurance pricing is another piece of the puzzle. Artificially low premiums don’t reduce risk—they obscure it. They encourage development in vulnerable areas and shift costs onto taxpayers. FEMA’s Risk Rating 2.0, which ties premiums more closely to actual risk, is a step in the right direction and should not be reversed. For households that genuinely need help paying premiums, targeted, means-tested assistance outside the rate structure would be more transparent and effective than artificially lowering rates.

At the same time, millions of at-risk homeowners remain uninsured, often because flood maps are outdated or fail to reflect current risks. When disasters occur, these gaps in coverage are filled with federal aid, which is more expensive for taxpayers and less reliable fallback (and smaller payments than insurance) for homeowners. As Ellis noted, as the program moves toward full risk-based rates, private insurers are likely to become more engaged. And if policyholders can bundle flood coverage alongside home and auto insurance by the likes of a Gecko, Flo, Mayhem, or an Emu, more people will be covered.

All of these issues will converge as Congress once again considers reauthorizing the NFIP. As the hearing made clear, lawmakers are not starting from scratch. They understand where the risks are, what policies would reduce them, and why the current system falls short. What remains uncertain is whether that understanding will translate into action.

Congress has repeatedly used authorization expiration to extend the program temporarily, avoiding difficult choices while allowing underlying problems to persist. Doing so again would not be a neutral decision. It would mean accepting continued repetitive losses, underinvestment in mitigation, and a growing burden on taxpayers.