USPS would save $6.2 billion under reform legislation, according to budget analysts.
All federal employees could see a better rate on their health insurance premiums under a bill to overhaul the U.S. Postal Service, according to an analysis from the Congressional Budget Office.
A key component of the 2017 Postal Service Reform Act would be the creation of a new health benefits program just for postal employees and retirees, while also requiring all eligible annuitants to enroll in Medicare as their primary provider. Federal workers remaining in their current Federal Employees Health Benefits plans would see their costs shrink, as removing postal employees -- who are generally costlier to insure than the rest of the federal workforce -- from their pools would decrease the overall expenses associated with their insurance. CBO did not estimate the savings FEHB enrollees would themselves receive, but it did predict the government’s portion of premium costs would decrease by $1.4 billion for federal retirees and $1.9 billion for current employees over 10 years.
Analysts also predicted premiums in the new system “for postal employees and annuitants would be lower than the FEHB premiums those people would face under current law.” Again, CBO did not project savings for the individual, but said USPS would save $2.2 billion for current postal workers and $2.5 billion over 10 years under the postal-specific health care program.
While the reform proposal has for the first time in several years of efforts to overhaul the Postal Service won the backing of both major political parties and nearly every stakeholder group, at least one organization remains in stark opposition. The National Active and Retired Federal Employees Association has come out against the bill, saying the 76,000 postal retirees who currently opt to use FEHBP plans as their primary insurers rather than Medicare would face unwanted new costs. By NARFE’s estimation, the premium for Medicare Part B, currently $134 per month, would exceed the savings the retirees would see in their new postal-specific wraparound plan.
“After finishing long careers with USPS, postal retirees should not be threatened with the loss of their health insurance entirely if they do not buy additional coverage through Medicare,” NARFE President Richard Thissen said after the House Oversight and Government Reform Committee approved the bill in March. “This not only eliminates choice with regard to health insurance for postal retirees living on fixed incomes, but it also sets a dangerous precedent for all federal retirees.”
The American Postal Workers Union, however, has endorsed the bill and said the CBO score marked a positive step forward. The savings, said Legislative and Political Director Judy Beard, demonstrated “the positive changes that have been made in the legislation.” APWU has noted that 80 percent of its retiree members already opt into Medicare, as it and their FEHB plans taken together provide “virtually 100 percent medical coverage with no co-pays, deductibles, co-insurance or catastrophic limits.”
To ease the transition for the remaining retirees onto Medicare, the bill would require USPS to pay 75 percent of Part B premiums for those not currently participating in the first year, 50 percent in the second year and 25 percent in the third year.
CBO acknowledged some postal retirees would incur new costs, but said they would be partially offset.
“[Some] postal annuitants would be required to pay new premiums associated with mandatory Medicare enrollment and additional amounts for health care services,” CBO wrote. “However, Postal Service health plans pay a share of the cost of annuitants’ health care services, and CBO estimates that the aggregate additional cost for those annuitants would be offset by those contributions.”
In total, through a combination of health care savings, rate increases, service changes and an accounting adjustment, CBO estimated the bill would save $6.2 billion. Those savings would not be recorded on the overall federal budget and would instead go to the Postal Service itself.