The Congressional Budget Office estimated that the government could save $1 billion a year by reducing the premium subsidy by 10 percentage points. The Government Accountability Office says it could save an additional $1 billion if individual farmer subsidies were capped at $40,000 a year.
The GAO said that in 2011 the average value of premium subsidies was $8,312 per farmer, and that one corporation that insured nursery crops in three counties in one state cost the government $2.2 million in premium subsidies and $816,000 in administrative expenses.
Agriculture Secretary Tom Vilsack has suggested lowering the premium subsidy rate, reducing insurance company returns on investment and cutting payments to farm insurance agents from $1,000 a policy to $900 to save money.
Farm groups argue that higher premiums would result in farmers insuring fewer acres and exposing taxpayers to more special disaster aid in bad times. The American Farm Bureau Federation opposes any changes in current farm bill payment limitations and means-testing provisions.
"Simply stated, payment limits bite hardest when commodity prices are lowest," the federation's president, Bob Stallman, said at a recent House hearing.
Senate Agriculture, Nutrition and Forestry Committee: http://www.ag.senate.gov
Environmental Working Group: http://www.ewg.org/agmag
Taxpayers for Common Sense: http://tinyurl.com/829qlft
Congressional Budget Office: http://www.cbo.gov/topics/agriculture
Government Accountability Office: http://tinyurl.com/bqm6zj8
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