Bipartisan USPS reform legislation will strengthen agency
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Bipartisan bills that address real national problems are rare these days.  Maybe it is not surprising that the Oversight and Government Reform Committee (OGR) produced a bipartisan postal reform bill in July, given that the self-supporting Postal Service is by far the most popular government agency – it had an 84 percent favorability rating in a recent Pew Research survey. But Oversight and Government Reform Chairman Jason ChaffetzJason ChaffetzDem demands documents from TSA after scathing security report Chaffetz replacement sworn in as House member Democrats expand House map after election victories MORE and Subcommittee on Government Operations Chairman Mark Meadows deserve a lot of credit for working with Reps. Elijah Cummings (D-Md.), Gerry ConnollyGerald (Gerry) Edward ConnollyLights, camera, SCOTUS Bipartisan pair wants commission to oversee Iran deal Dem lawmaker warns of 'political and moral limitations’ to working with Trump MORE (D-Va.) and Stephen Lynch (D-Mass.) to strengthen an agency that is crucial to the $1.4 trillion mailing industry that employs 7 million private sector workers and 600,000 postal employees across the country.

The USPS has been operationally profitable for the past three years, but a 2006 law that transformed a long-term liability for future retiree health benefits into an unaffordable short-term liability ($5.5 billion annually) has obscured the agency’s e-commerce fueled comeback from the Great Recession. That law created the red ink you’ve read about – it uniquely requires the USPS to prefund future retiree health benefits decades in advance and accounts for 90 percent of reported losses since 2007, and 100 percent of losses reported since 2013.

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That’s where the OGR postal reform bill (H.R. 5714) comes in. It proposes to adopt private sector best practice to reduce the cost of future retiree health benefits by integrating federal health insurance coverage of postal senior citizens (age 65 and older) with Medicare. 

The vast majority (80 percent) of postal retirees already do this at age 65 by signing up for Medicare Parts A and B. But if most of the rest were also enrolled, as proposed by H.R. 5714, the cost of retiree health insurance would go down for all active and retired postal employees. Average premiums would be reduced by approximately 10 percent -- a savings that will amount to billions of dollars over time. Indeed, it would dramatically reduce the cost of the prefunding mandate. Half the savings would come from providing federal health plans with the low-cost prescription drugs from large pharmaceutical companies made possible by the Medicare Modernization Act.  The other half would come from Medicare becoming the primary payer for enrollees 65 or older, just as it is for private sector health plans.

The plan would raise Medicare spending by less than two-tenths of one percent and add just 77,000 new retirees to the 50 million seniors now enrolled in the program.  Its impact on the program’s finances would be minimal – but it would make the prefunding burden on the Postal Service manageable. It also would allow the USPS to focus more on innovation after slashing its workforce by 200,000 employees and boosting productivity dramatically in recent years.

Some conservative think tanks claim this is some sort of taxpayer bailout. This is nonsense. The Postal Service and its employees (who also are taxpayers) have contributed nearly $30 billion to Medicare over the past several decades. Fully using a program that postal employees have paid into is not a bailout; and those same employees would be subject to any future reform of Medicare. 

It may seem unfair to a minority of current seniors who would now be required to enroll in Medicare Part B after choosing not to do so when they turned 65. Although virtually all such seniors will be financially better off over the long run with this change, this concern has merit.  It should be addressed by a targeted amendment, not be used to oppose the overall reform bill.  The OGR actually took steps to address these affected seniors – the bill requires USPS to help them pay for the Part B premiums over the three years after enactment, and it provides for one-time-only waiver of Part B’s late enrollment penalty.  What is also needed in the bill is authority to grant hardship exemptions from the Part B mandate in special circumstances. With that modest change, the bill would fully protect any truly vulnerable seniors.

Of course, as with any legislation, there are other issues to be worked out as the legislation moves through both houses of Congress.  For example, many mailers and NALC strongly oppose the bill’s mandatory conversion from door delivery to centralized delivery for perhaps millions of American businesses.  This would be counter-productive -- businesses generate mail volume and revenue, and pick-ups and door delivery in the age of e-commerce are more essential than ever. 

Fortunately, thanks to the leadership of Mr. Chaffetz and Mr. Meadows, there is a real spirit of bipartisanship on this bill.  And there is a broad business and labor coalition, including America’s letter carriers,  behind its approach. We look forward to working with the OGR committee to enact postal reform this year.


Fredric Rolando is president of the National Association of Letter Carriers.