Creeping Socialism Update: Crop Insurance From Uncle Sugar.

Richmond Federal Rseserve reports:

Under the multiyear farm bill enacted in early 2014, crop insurance is expected to cost taxpayers $41 billion over five years - a jump of almost 20 percent over the previous farm bill, enacted in 2008. Crop-insurance advocates argue it is afar more efficient program to manage an array of risks than ex post disaster relief. It has evolved from an underused program that was plagued by adverse selection in the 1980s to one that covers almost every crop today, with high participation. By 2013, 89 percent of all U.S. farmland was covered by the program, covering more than 290 million acres. In 2012, lawmakers didn't even pass stand-alone disaster aid legislation after a devastating drought because insurers' payouts were comprehensive enough for the crops affected. In the view of its supporters, crop insurance has succeeded as a risk management tool because it covers most farmers, pre-empts the need for ad hoc disaster relief, and effectively substitutes for other, less efficient forms of support.

Critics of crop insurance subsidies, however, point to the fact that the program is still a transfer from taxpayers to farmers and private insurance companies, and as constructed, it is more income support than classic insurance. The government covers about 60 percent of the cost of farmers' insurance premiums as well as 100 percent of administrative and operating costs for insurers, which means farmers can sign up for policies that provide payouts far more generous than reflected by their out-of-pocket cost.

Creeping socialism update. Gee, private insurance could do the job. So, could futures and options.