Tropical Storm Harvey, which destroyed thousands of homes and businesses across southeastern Texas, is now estimated to be one of the costliest disasters in American history, with damages that could exceed $100 billion.
Rebuilding efforts along the Gulf Coast, already expected to take years, will be complicated by the fact that fewer than one in five homeowners in the Houston area are insured against flood damage. Those without it could wait months, or years, to fund costly renovations themselves or receive government relief funds.
Even people with insurance are not in the clear as they will be dealing with a program that is mired in problems: The National Flood Insurance Program is nearly $25 billion in debt and will expire Sept. 30 if Congress does not extend it.
Lawmakers and experts are debating how to improve the program's long-term financial outlook, which could include requiring more homeowners to buy flood insurance or discouraging people from rebuilding in areas that will see more storms.
Texas is "one of the biggest recipients of relief money, but flood insurance has done very poorly in Texas," said Scott Knowles, a disaster historian at Drexel University.
After decades of relatively stability, the flood insurance program fell into debt after paying out nearly $25 billion in claims from Katrina and Superstorm Sandy, which could not be covered through policyholders' premiums. Today the program has $5.8 billion in borrowing authority from the U.S. Treasury.
Payments from Harvey are expected to far exceed that limit.
Harvey swept through a swath of southeast Texas, triggering disaster declarations in 19 counties.
The national forecasting firm Moody's Analytics estimated total damages of between $81 billion and $108 billion, which would make Harvey the second costliest storm in U.S. history, behind Katrina, which cost $175 billion.
An estimated 400,000 homes and 700,000 vehicles were significantly damaged. More than 32,000 people have been housed in shelters.
The effects will be felt more broadly as they sap momentum from the U.S. economy. Motorists across the country can expect to pay more for gas, at least for a while, and consumer spending overall could fall a bit as well. U.S. exports could see a slight drop from the temporary closure of one of the nation's busiest ports.
Already, more than 51,000 people have filed claims with the national flood insurance program, a number that will certainly rise. Each policyholder can receive up to $250,000 for repairs to their homes, and up to $100,00 for what's inside.
That gets to the heart of the problem with the flood insurance program, experts say: Because subsidies have kept premiums artificially low, it can't pay for itself, particularly as the number of severe storms gets worse.
"Carrying around a deficit that they're never going to repay doesn't make any sense," said Carolyn Kousky, the director of policy research at the University of Pennsylvania's Wharton Risk Management Center.
Congress created the National Flood Insurance Program in 1968, three years after Hurricane Betsy devastated parts of Florida and the central Gulf Coast.
Few private firms had offered flood insurance, because costly, simultaneous payouts seen during disasters could easily bankrupt a company. The new federal program aimed to provide some financial stability for homeowners in flood plains.
The program is administered by the Federal Emergency Management Agency and today insures about 5 million Americans.
Homeowners in identified flood-risk zones are required to buy insurance through private companies, but the federal government establishes the rates and provides subsidies to keep them down.
FEMA's maps require policies in areas with a 1 in 100 chance of severe flooding in any a given year. But many people whose homes are not in those areas still face the risk of flooding.
Maps are frequently outdated — the map of New Orleans had not been updated for two decades when Hurricane Katrina struck in 2005 — and don't factor in the flooding risk from rainfall during storms, which scientists say will happen more regularly in the future.
"The risk of flooding is changing across the entire landscape of the country, and that's not communicated well to homeowners," Kousky said. "You get people who are outside the line who think think they're safe. It doesn't mean that all."
In the Houston area, the high-risk zones cover a fraction of the city, typically along the rivers and bayous. The number of policies has dropped over the last five years.
The average annual premium in Houston is $555.
The cheap rates have also confused some homeowners about the risk of flooding in their neighborhood.
"If you had to pay the full cost of a risk, then that might discourage people from living in really risky areas, or building in ways that are risky," Kousky said. "There are areas, where, frankly, we shouldn't be building."
Congress also allowed homeowners to keep older, lower rates, if analysts later find their homes are at greater risk of floods. Critics say that grandfather clause has spiraled into a federal subsidy for risky building on flood plains. Today, up to a fifth of policy holders pay premiums that are artificially low, officials say..
Local areas interested in providing flood insurance for residents are required to craft zoning policies designed to discourage building in flood plains — a rule that Kousky said is essentially unenforceable in Texas because of its size.
In Houston, decades of dramatic growth in the suburbs has crippled the region's natural drainage system of freshwater wetlands. Water-resistant surfaces such as concrete rose by one-fourth over a 15-year period that ended in 2011, a Texas A&M University study found.
Researchers concluded that the type of development also mattered: Houston's low-density sprawl increased losses from flood damage, while denser development decreased it.
"A state with very, very lax building codes has managed to access this program and has continued to build in ways that put people at risk," said Rebecca Elliott, a London School of Economics assistant professor who is working on a book about how the U.S. handles the cost of major floods.
About 1% of the highest-risk homes have received about 30% of funds from the program. More than 30,000 homes across the U.S. are classified as "severe repetitive loss" homes — properties that have been rebuilt with government funds an average of five times.
In Harris County, FEMA has spent $265 million on claims for 1,155 of those homes, according to data from the National Resources Defense Council.
Citing many of these factors, government auditors have classified the program as "high risk," noting that claims administrators don't have the information they need to make sound payouts. One way to make the program more sound, auditors said, would be to spend more money on mitigation.
Lawmakers across the political spectrum would like to see similar reforms, but progress has been sporadic .
In 2012, Congress passed a bill aimed at shoring up the flood insurance program's financial future, only to rescind the changes two years later after homeowners complained that their premiums had soared.
Two years ago, President Obama signed a directive requiring federally funded projects to meet a series of flood-risk standards. That policy was reversed two weeks ago, as part of President Trump's push to roll back environmental rules to speed infrastructure projects.
"This was an opportunity to do something we see very rarely on the Hill, which is to satisfy fiscal hawks and environmental concerns," said Knowles of Drexel University. "Congress did something good, then they undid it. Now, they have an opportunity to do something again."
In Washington, legislators are wrangling over whether to address the issues now, or extend the program without making any changes.
Tom Bossert, homeland security advisor for President Trump, said the administration would like lawmakers to extend the program as is, then debate policy changes later this fall. At least $8.6 billion is available to cover claims from Harvey, he said.
"I don't think now is the time to debate those things, as we need to help people that have pending claims," Bossert said at a White House press briefing Thursday.
A package of bills advocating for higher premiums and more involvement by the private insurance market is awaiting a U.S. House vote, but more than 100 members have already said they will not sign it.
Times staff writer Lauren Rosenblatt contributed to this report.