Increasing program cost
University of Illinois
Cost to the U.S. government of its crop insurance program has increased from $3.3 billion in 2000-2004 to $8.6 billion in 2010-2014 (see figure 1 and data note 1). Costs include the subsidy of insurance premiums, reimbursement of Administrative and Operation (A&O) costs incurred by private companies in delivering the insurance program, and government's share of participating in underwriting gains and losses. Any large expenditure program growing fast will attract attention. Moreover, the growth in crop insurance cost occurred during a period of generally low financial stress among crop farms. This feature runs opposite to the counter-cyclical nature of most farm safety net programs since these programs began during the 1930s.