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Letter to the Editor: On the US Postal Service health care plan

Friday, August 23rd, 2013

US Postmaster General Patrick Donahoe writes to explain the benefits of the current USPS health care proposal, in light of the recent assessment by the GAO.

Dear Sir,

A Government Accountability Office (GAO) report issued this week (see: GAO: USPS healthcare plan would have large financial benefits – and risks) states that the Postal Service would likely realize large financial gains from its proposed health care plan. The GAO’s conclusion is fully consistent with the determination of the Postal Service in this regard.

The GAO report also correctly states that most of the financial benefits from the proposed plan would result from increasing the use of Medicare by postal retirees. This element of the proposed postal health plan is perfectly appropriate and logical, and is consistent with the health plans that any reasonable employer that contributes to the Medicare system would provide for its retirees, to the extent retiree coverage is provided.

As the second largest employer contributor to Medicare in the United States, the Postal Service and its employees have already paid $26.5bn into the program. By not integrating fully with Medicare, Postal Service employees and retirees pay more for their health benefits premiums than private sector retirees who are required by their employers to sign up for Medicare. We are simply asking to be treated as any other private employer or state and local government employer that provides retiree health care. No less, no more.

The GAO also estimated that if the proposed health plan had been implemented in 2013, most postal employees and retirees would have had similar or lower premiums compared to the selected Federal Employees Health Benefits (FEHB) plans, with similar or higher levels of coverage for many services. Under the Postal Service sponsored health care plan, a small minority of employees electing full family coverage would pay more for health care benefits, but the overwhelming majority would pay far less immediately, and all employees would pay less over their careers. On average, premiums under the proposed Postal Service’s plan would be 16 percent lower than FEHB premiums.

The GAO rightly concluded that a Postal Service health care plan would go a long way toward putting the Postal Service on a path to solvency and long-term financial stability. By fully integrating with Medicare, we would not have unfunded Retiree Health Benefits liability, saving $5.6bn to $5.8bn annually. What prudent business in our financial condition would not implement such a plan, if given the opportunity to do so?

Without addressing the cost issue in a responsible way, the Postal Service may be unable to afford to provide health care benefits to retirees. Our proposal assures that we will.

Sincerely,

Patrick R. Donahoe

Patrick Donahoe is the 73rd Postmaster General of the United States and chief executive officer of the US Postal Service.

Source: Patrick R Donahoe, US Postal Service

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Letter to the Editor:  On the US Postal Service health care plan

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