February 18th, 2013 | Office of Personnel Management OPM Pay & Benefits Postal Service | Posted by Sean Reilly
Email: sreilly@atpco.com
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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 unilaterally 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, its plan is likely to present a tough sales job.
Tags: Federal Employees Health Benefits Program, John Berry, Pat Donahoe
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