Lest anyone forget, Postmaster General Pat Donahoe remains keenly interested in creating a stand-alone health insurance plan for about 1.1 million U.S. Postal Service employees and retirees.
The latest reminder came at last week’s Senate hearing on the USPS’s financial crisis. Although lawmakers’ attention was predictably focused on the agency’s decision to end Saturday mail delivery, Donahoe also stressed the urgency of pulling out of the Federal Employees Health Benefits Program.
“An astonishing 20 cents of every revenue dollar the Postal Service takes in must go toward health care costs,” Donahoe said in prepared testimony. “By moving away from the federal system, nearly all of our employees and retirees would reap the benefits of getting equivalent or better healthcare coverage and paying less for it.”
Creation of a new health plan was a major stumbling block in contract talks with the National Association of Letter Carriers; although labor and management couldn’t reach a deal, a joint task force will keep discussing the issue, according to an arbitration panel’s recent decision.
But the Postal Service hasn’t furnished many details about what it has in mind. And employees may understandably be skeptical of any promises to provide comparable (or better) benefits at lower cost. Fortunately, the USPS inspector general took a look at the subject last year that fleshes out some specifics.
The inspector general’s report, whose conclusions drew a vigorous dissent from Postal Service management, can be read here. It’s of course possible that the USPS human resources team has since made changes to their plan; if so, however, those changes haven’t been made public.
In the meantime, here are a few takeaways from the IG’s review. By the Postal Service’s reckoning, creation of a stand-alone plan would save $52 billion. (The original total was $62.1 billion, but the agency then dropped the idea of freezing its contributions for retiree health insurance, according to the report.) Although the IG doesn’t say over what period of time those savings would occur, the key is requiring employees and retirees to move to Medicare, the taxpayer-funded medical benefits program for people aged 65 and older.
That step alone would save some $37 billion; for older employees and retirees, the Postal Service’s health plan (whatever it turns out to be) would become the back-up insurer to Medicare. The Postal Service would also be freed of much, if not all, of the obligation to set aside billions of dollars now for future retiree care.
But from the employee/retiree perspective, there’s one immediate concern. By law, anyone eligible for Medicare Part B (which covers things like doctors’ visits and lab tests) is supposed to sign up after turning 65 or else face a 10 percent, per year, enrollment penalty.
According to the IG, there were about 88,000 USPS retirees over 65 who hadn’t signed up. Those folks would thus face late-enrollment penalties totaling $53 million per year, or an average of $625 per person. The Postal Service needs to settle that issue, the inspector general said, either by ensuring that the penalties will be waived or by deciding who’s going to foot the bill.
USPS workers and retirees could also pay more under another proposed change that would require anyone retiring after the end of this year to pay a standard deductible before the Postal Service picks up any cost not covered by Medicare. But the Postal Service would also expand coverage options from the two currently offered by the FEHBP to four. In some instances, employees could pay less than they do now. (Check out p. 11 of the IG report for a side-by-side comparison.)
The overall goal here is simple. The Postal Service, like any other money-losing enterprise, is trying to tamp down costs wherever it can. And postal workers generally pay less for their health benefits than other federal employees.
But because congressional approval is required, the Postal Service’s plans need political traction that so far appears to be lacking. At a September 2011 congressional hearing, for example, Office of Personnel Management Director John Berry was notably unenthusiastic about letting the Postal Service leave the FEHBP. A fuller analysis of the potential effects was needed, Berry said, adding that he thought postal employees were “well-served” by the status quo.
In last year’s report, the inspector general recommended that USPS officials lay out to affected employees and retirees, as well as the government, “all potential cost increases, cost savings and cost shifts that would result from a transition to a Postal Service-proposed alternative health care plan.”
In their strongly worded response attached to the report, postal executives both disputed key findings and objected to what they called its “negative tone.” The Postal Service, for example, has proposed relief from the Medicare late enrollment penalties, they wrote. A draft of the report, they added, “totally ignores the fact that total costs will decrease substantially and that out-of-pocket costs for most employees and retirees will decrease.”
The Postal Service has yet, however, to make the kind of detailed disclosure urged by the IG. Until it does, a tough sales job lies ahead.
February 18th, 2013 at 7:27 pm
The U.S.P.S. could not handle its own finances, but they feel they could easily handle medical insurance finances. How much money will they move to some other fund to pay for their bonuses and higher salaries? What about the employees whom have very expensive medical procedures and illnesses, will they cover them or just throw them to the other insurance companies? Lastly, how much will they charge for the insurance, will there be more than one tier, what would be the deductible for single or for family coverage, would there be a maximum payout amount for the healthcare policy, would the plan include vision and dental, etc.? For the people who read this who do not work for the USPS just think the opposite of logical and then you will understand what the employees (active and retired) live with while employed here go thru.
February 18th, 2013 at 8:12 pm
“nearly all of our employees and retirees would reap the benefits of getting equivalent or better healthcare coverage and paying less for it.”
Wanna bet “nearly” means l’enfant plaza personnel?
Michael P. Kaehler Says:
February 18th, 2013 at 8:36 pm
This “may” save the USPS money, but as time passes and the number of employees decreases so will the value of the insurance program and the benefits decrease and the costs to the employee increase. In the meantime, the USPS pulling out of FEHB will increase the costs of to the remaining federal employees in the available plans that remain – and, further, one must not forget that the postal union have their own insurance plans that are a source of major income to these unions that they will be unwilling part with.
ET Wilken Says:
February 18th, 2013 at 8:40 pm
I’ll be for it if that’s the healthcare plan for ALL USPS employees, including the PMG….Yeah, right….
February 18th, 2013 at 8:42 pm
Of course this does not affect upper mgt, as they get free health insurance now and after they retire. Because they really struggle to make it on “their pensions”!!!!
February 18th, 2013 at 9:00 pm
Easy. If the USPS agrees to hire all of the employees who currently work for the 3 craft FEHBP’s (or buyout those who choose to leave), APWU, NALC, and Rural Carriers, and combine the best attributes of those 3 current plans– now we’re talking possibile cooperation between USPS management and craft employees, and Congressional approval of a stand alone health plan becomes a viable alternative. That’s a lot of ifs and buts requiring intensive negotiations, but (just love that word) it just might move to fruition. Throw in dental and eyecare along with lower premiums and you got a deal. What did Monty Hall say? Let’s Make a Deal.
February 18th, 2013 at 9:12 pm
Forgot the Mail Handlers. Make that 4 craft FEHBP’s. Sorry guys.
February 19th, 2013 at 12:21 am
If it is so easy for the Postal Service to provide better health care to Postal Employees for less money than they now pay there should be another large organization in the United States doing it at this time.
The first step should be to show us the organization that is now doing it.
The second step is to show us how the Postal Service plans to copy that organization.
Until we are shown some one who has already successfully provided Health Care that meets the requirements. I have to assume the costs must be saved by cutting services.
February 19th, 2013 at 12:22 am
Just like when Management came around 25 years ago and tried to tell us the new FERS retirement was better than CSRS. We should all switch !Yea,right! Better for thier bottom line, not yours.
Do you trust these fools who ran the Postal Service in the ground with your Health Care?Hell no. If it was better for YOU they would not offer it! These bonus ($) loving,selfesh Managers are not your friends or friends of the Customers (the citizens of the USA).
February 19th, 2013 at 1:55 am
One huge issue not discussed in the report is whether or not USPS plans on having the details of the plan’s benefits and contributions being a subject of collective bargaining at every contract negotiation. As a recent retiree it terrifies me to contemplate the union’s contract negotiators, who are subject to election challenges, having to choose between contractual wage, benefit, and working condition advances for current employees on one hand, or providing decent, affordable health benefits for retirees on the other hand. Getting FEHB benefits in retirement is a huge reason I chose a career in the Postal Service. It would be totally unfair to break this promise to employees who have already irrevocably performed their end of the bargain.
Joey Jo Jo Jr Shabadoo Says:
February 19th, 2013 at 3:10 am
Odds are the NALC and USPS are negotiating to make the NALC plan the “Official Health Plan” of ALL postal employees. There is money to be made here. The APWU plan generates over $3 million in profit every year. Not sure about the NALC plan, but I’m sure it does quite well. The only way to get employees on board is to pick one of the union sponsored HPs. Then that union will sell the deal to their members. All others will be forced to join.
February 19th, 2013 at 4:16 am
This Donahoe care excludes the PMG and all officers of the USPS. As the bill was written the PMG and VPs get the option to stay in FEHBP.
February 19th, 2013 at 7:35 am
There is no way the USPS can be trusted to “run their own healthcare coverage”. PLEASE do not let this happen, congress.
February 19th, 2013 at 8:14 am
I am an unpopular retiree for being an advocate of commonsense reforms like 5 day delivery and pay cuts. However, I am deeply skeptical of this proposal. I think employees would be best served by dealing with the devil they already know named FEHBP. Either you’re a Federal Employee or you’re not, and if we’re at this point the discussion really should be as to selling The USPS to the private sector. That’s for The American People & Congress to decide but as long as The USPS is Federal property then its’ employees deserve The FEHBP. So, no Mr. PMG, no to this change, but I say yes to 5-day delivery. Happy compromse.
February 19th, 2013 at 8:45 am
Postal managment could not run a water hose if it were turned on for them….
Ric H. Says:
February 19th, 2013 at 10:01 am
A change to a Postal Service Health Care system would require new organization(s) within the Postal Service, additional physical space, computer systems, the hiring of qualified health care and medical personnel, finance and accounting systems, etc. This WILL increase the overall infrastructure of the Postal Service at added costs. If they want to change, change for current employees and leave the retirees out of it, they worked for the benefits they have earned!
February 19th, 2013 at 12:36 pm
The Postal Service urged employees to switch to FERS in the 1980’s and look how that worked out for employees. There is so much unseen waste in the Postal Service and now they want to manage our health care. They cannot even manage what they are responsible for now; Give me a break, The OPM Director John Barry is against this change as he testified before Congress for the reason why he was against the Postal Service having their own health care program . He testified that the FEHB plan serves the all federal employees and retirees very well. If it is not broken, why meddle in something that works…typical Postal Service move…
February 19th, 2013 at 2:12 pm
We will switch health plans if we can have the same health plans as Congress and the Senate at the same cost along with the same pay. The only difference is that we get things done!
February 19th, 2013 at 2:35 pm
WRITE YOUR CONGRESS PERSON!!!!!!!!!!!!!!!!!!!!!
February 19th, 2013 at 3:29 pm
Boy Jason you’re a real sport.Now that you’re retired you’re all for 5 day delivery and cuts in pay but don’t touch your retiree health benefits.How about a cut in your pension payments? You’re a selfish pig.
February 19th, 2013 at 3:43 pm
oh gawd, i don’t want to lose bcbs! i hated apwu insurance, please not that!
February 19th, 2013 at 6:08 pm
Under the new Affordable Care Act, employers who provide health insurance coverage to their employees cannot charge the employee more than 9.5% of the total premium costs…the employer has to pick up the balance. I wonder how this is going to affect the USPS employees, who now pay around 24% of the total premiums……sounds like under the new programs, the FEHB plans will have to cut the benefits to keep the premiums lower to meet the 9.5% limit per employee, or else ask for a waiver from the AHCA…….more loopholes that were never expected.
Roger in Calif. Says:
February 19th, 2013 at 6:28 pm
Over 65? Medicare Part B does not penalize anybody who has been continually covered by other health insurance.
February 19th, 2013 at 8:09 pm
Please save my health insurance (BCBS). Everyone takes it. It is a life safer. Is it not enough that every year we are paying more on premiums? The PMG is trying to destroy the USPS. If he gets his way we must take service out of our name. Is it not enough that we deliver packages or FedEx and UPS making them billions of dollars while we slow die?
February 20th, 2013 at 8:54 am
Jason (February 19th, 2013 at 8:14 am ) I am in total agreement with you. Well said, my fellow retiree!!
Virginia Mahal Says:
February 20th, 2013 at 9:51 am
NO NO NO – I agree with all who say top management has run the Service to the ground but not making necessary changes earlier. I’ve been retired almost 7 years, working in a large District with Plant affiliation, I could see the ever-decreasing mail volume every day. Management kept getting bonuses, wasting money here, there and everywhere. It was business as usual, no matter what. PLEASE don’t those dips touch earned benefits.
Harry Walsh Says:
February 20th, 2013 at 4:32 pm
Whers the eef
February 20th, 2013 at 6:46 pm
After seeing what Obie has done to health care we are all in deepo poop. Wonder why the boy and his tribe are not under Obie(does not)care? Because it sux as much as he does!