The recent State of the Union address has sparked a national conversation about the fundamental structure of the American insurance system, from the way we fund health coverage to the way we protect our homes from escalating climate risks. Simon Glairy, a distinguished expert in risk management and insurance policy, joins us to break down the complexities of these proposed shifts. Our discussion centers on the potential transition toward direct consumer subsidies for health insurance, the stark contrast between soaring industry stock performance and rising patient costs, and the urgent, yet often overlooked, crisis in the property insurance market. We also explore the fiscal future of prescription drug pricing and the stability of federal flood protections as the nation faces a pivotal crossroads in public policy.
If federal funding for health insurance shifted from direct carrier payments to direct consumer subsidies, how would that transition impact individual policy costs? Could you walk through the logistical challenges of managing billions in private subsidies while ensuring coverage remains stable for low-income populations?
Shifting the flow of roughly $92 billion in annual premium tax credits from insurers directly to consumers represents a massive structural pivot that would likely create immediate volatility in policy pricing. When funds move directly to carriers, there is a level of automated stability that ensures premiums stay lower at the point of purchase, but placing that money in the hands of individuals creates a significant administrative burden on the average citizen. Logistically, the government would have to build a distribution infrastructure capable of managing billions of dollars across millions of households without the risk of funds being diverted for non-healthcare expenses. For low-income populations, any delay in these subsidies could result in immediate coverage lapses, as these families often lack the liquid capital to “float” their premium payments while waiting for a federal reimbursement. To keep the market from splintering, we would need a sophisticated real-time verification system to ensure that these funds are used exclusively for qualified health plans, a task that requires a level of technological precision the federal government has historically struggled to achieve.
Major health insurance stocks have seen growth exceeding 1,000 percent over the last decade. How does this financial performance influence current policy debates, and what specific regulatory changes could reconcile high corporate profits with the public demand for significantly lower patient premiums?
The optics of major insurers seeing stock gains of 1,032 percent—and in some specific cases as high as 1,700 percent—create an incredibly difficult political environment for the industry when patients are simultaneously struggling with rising costs. These figures have become the focal point of a heated debate over whether the current system prioritizes shareholder returns over public health, leading to calls for more aggressive federal oversight. To reconcile these profits with the demand for lower premiums, regulators might look at tightening Medical Loss Ratio requirements, which dictate exactly how much premium revenue must be spent on actual clinical services versus administrative costs and profits. There is also a growing push to decouple executive bonuses from short-term stock performance and instead link them to measurable improvements in patient affordability and health outcomes. However, we must be careful, as the industry-wide average growth is closer to 700 percent for many, meaning a “one-size-fits-all” regulatory hammer could inadvertently destabilize smaller regional insurers that don’t enjoy the massive margins of a UnitedHealth or Centene.
While some programs offer steep discounts for cash-paying patients, list prices for nearly 1,000 brand-name drugs continue to rise annually. How can most-favored-nation pricing models effectively compete with international averages, and what metrics should we use to determine if patients are seeing real savings?
The most-favored-nation model is designed to ensure the U.S. doesn’t pay more for drugs than other developed nations, yet current data shows our prices remain about 2.78 times higher than the international average. Even as some platforms offer relief for cash-paying patients, the reality is that manufacturers raised list prices on approximately 950 brand-name drugs in early 2026, which ripples through the entire insurance system and eventually hits the consumer in the form of higher premiums. To determine if patients are actually seeing real savings, we should move away from tracking “list prices” and instead focus on the “net price” paid after all rebates and subsidies are applied at the pharmacy counter. We also need to track the “total cost of care” per patient; if drug prices drop but hospitalizations for chronic conditions rise because of restricted access to those drugs, the system hasn’t actually saved any money. Real success would be measured by a narrowing of that 2.78-to-1 price ratio while simultaneously reducing the out-of-pocket burden for the most vulnerable patients who rely on life-sustaining medications.
Homeowners insurance costs have surged by nearly 40 percent recently, particularly following massive events like the $22 billion Los Angeles wildfires. Why is the national discourse often silent on these property risks, and what specific steps are needed to stabilize the market before the next disaster?
The silence on property insurance in the national discourse is frankly deafening, especially when you consider that the average American’s policy cost has climbed by 30 to 40 percent over just the last five years. High-profile disasters like the Los Angeles wildfires, which consumed 11,000 homes and triggered $22 billion in payouts, are often treated as isolated tragedies rather than symptoms of a collapsing insurance market. To stabilize this, we need a two-pronged approach: massive federal investment in community-level mitigation—like creating fire breaks and updating building codes—and a modernization of how we allow insurers to price for future risk. Currently, many state regulators force companies to look only at historical data, but in a world where “once-in-a-century” fires happen every few years, insurers need to use forward-looking models to remain solvent. Without these changes, we will continue to see a “silent crisis” where major carriers simply pull out of high-risk states, leaving millions of homeowners with no options but the most expensive, last-resort coverage.
The National Flood Insurance Program faces a critical reauthorization deadline in late 2026 after dozens of short-term renewals. What are the long-term economic risks of this instability, and how would a multi-year extension change the way insurers approach high-risk coastal or wildfire zones?
The National Flood Insurance Program is currently a house of cards, having endured 35 short-term renewals since 2017, which creates a climate of extreme uncertainty for the $1.3 trillion in property value it protects. This instability discourages private insurers from entering the market because they cannot predict federal policy or pricing more than a few months in advance, leading to a lack of competition and higher costs for the 4.6 million policyholders. A multi-year extension, such as the seven-year plan proposed by industry advocates, would provide the regulatory “north star” needed for insurers to invest in long-term risk assessment and new technology. It would allow for a more gradual, predictable adjustment of premiums to reflect true risk, rather than the frantic, reactive price hikes we see following major disasters. More importantly, long-term stability gives the real estate and construction industries the confidence to build more resilient structures, knowing that the insurance backstop won’t disappear in the next fiscal quarter.
There are new proposals to expand employer-matched retirement plans to workers who currently lack access. How would this initiative interact with existing Social Security and Medicare protections, and what are the specific implementation steps required to ensure these programs remain solvent for future generations?
Expanding employer-matched retirement plans to the millions of workers currently left out of the 401(k) system is a vital step toward reducing the long-term strain on the Social Security safety net. By encouraging private savings earlier in a worker’s career, we create a multi-tiered retirement structure where federal benefits are a supplement rather than the sole source of survival, which is essential as the retiree-to-worker ratio continues to shift. Implementation would require a streamlined, “plug-and-play” retirement platform for small businesses that currently find the administrative costs of managing a plan to be prohibitive. We must also ensure these new private plans are portable, so a worker’s savings move with them from job to job without being drained by fees or early withdrawal penalties. To maintain solvency for the broader system, these initiatives should be coupled with incentives for workers to delay taking Social Security benefits, using their private matched funds to bridge the gap in those early retirement years.
What is your forecast for the health and property insurance markets over the next two years?
The next 24 months will likely be a period of intense “rebalancing” as both markets struggle to align their pricing with a new reality of high inflation and increased climate volatility. In health insurance, I expect a significant push toward transparency, where carriers will be forced to justify their margins in the face of the 1,000 percent growth narratives currently dominating the political stage. On the property side, the “silent crisis” will likely become much louder; we will see more states following California’s lead in dealing with carrier exits, potentially forcing a federal conversation on a national catastrophe backstop. Ultimately, I believe we are moving toward a more fragmented market where your zip code and your personal health data play an even larger role in your monthly costs. It will be a challenging time for consumers, but it may also be the catalyst for the structural reforms that have been delayed for decades.
