Democrats skeptical of USPS push to sponsor own healthcare program

The Postal Service might want to take more control of its own healthcare program, but Democratic lawmakers appear far from sure about the idea.

Postmaster General Patrick Donahoe said Tuesday that the Postal Service’s proposal to move more into the private sector on healthcare would help his agency save money and be a better deal for present and retired postal workers.

But Democrats on the House Oversight Committee said that allowing the Postal Service to break away from a federal plan could mean higher costs and worse coverage for USPS employees.

“You’re making me nervous,” said Rep. Stephen Lynch (D-Mass.) told Donahoe at a Tuesday hearing of the Oversight subcommittee on the federal workforce.

Healthcare costs have been a key part of the conversation as lawmakers in both chambers seek to hammer out legislation to put the Postal Service, which lost some $25 billion over the last five fiscal years, on more sound financial footing.

The Senate turned aside a procedural vote on a bipartisan postal reform bill on Tuesday, allowing the chamber to continue taking up a measure on oil industry tax breaks. The Senate will now likely turn to the postal measure after the upcoming two-week recess, while a House Republican bill also is waiting for floor consideration. USPS has put forward its own set of proposals, including the healthcare changes, that it says would cut $22.5 billion in costs by 2016.

Under the USPS healthcare framework, which Donahoe said could produce $7 billion in savings, employees eligible for Medicare would be required to use those benefits and the agency would offer insurance through a private-sector vendor.

“Whatever we would present to employees and retirees would be something they would be interested in,” Donahoe said Tuesday.

But the nation’s top postal official also admitted that employees have sounded anxious about the proposed changes. Congress would need to give USPS the authority to be in charge of its own healthcare program, and Donahoe told lawmakers Tuesday that details of the transition would still need to be worked out.

“I think any time you get into a big change like this, there’s no real comfort level,” Donahoe said.

As it stands, USPS is also mandated to prefund billions of dollars for retiree healthcare, something some lawmakers have called for eliminating.

Under the Senate postal bill, those prepayments would be stretched out over a longer period of time, and USPS could negotiate with postal unions over leaving the federal healthcare arena. The House bill, sponsored by Rep. Darrell Issa (R-Calif.), the Oversight chairman, would allow the service to pay a smaller prepayment this year before making up the difference in future years.

Issa said Tuesday that he could probably get on board with allowing USPS to leave the federal health program, but also indicated that the plan wouldn’t save much money because of its reliance on Medicare.

"Let's have no illusions,” Issa told Donahoe. “You're just cost-shifting.”

Even though the agency's full healthcare framework isn't in either the House or Senate bill, Donahoe suggested to reporters after Tuesday’s hearing that he still hoped the plan could play a role as lawmakers moved forward and looked at the issue of the prepayments.

“We would certainly hope that once the House and the Senate sit down, with what we’ve laid on the table, there are some opportunities to come together,” the postmaster general said.

Still, the USPS proposal is also drawing some fire from outside experts who say the plan would badly injure the Federal Employees Health Benefits Program (FEHBP).

“In destroying the FEHBP, the USPS would disrupt the health insurance of 8 million Americans,” Walton Francis, an independent consultant, told Tuesday’s hearing in his prepared testimony.

USPS has also said in recent months that it was moving forward with a plan that could potentially close more than 200 mail processing centers, which would end next-day delivery in many cases.

The Postal Service has said it won’t close any facilities before May 15 to allow lawmakers time to enact a reform bill. Donahoe added Tuesday that he had held discussions with senators looking to close fewer processing centers, perhaps in exchange for higher postage rates.

Some Democratic senators have pushed to make changes to their chamber’s bill, saying it does not currently do enough to protect rural post offices or maintain delivery standards. The private-sector mailing industry has said it would oppose legislation that increased postage rates.

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