Members of the House Oversight Committee signed, sealed and delivered draft legislation for reforming the Postal Service.
The Postal Service Reform Act of 2016 looks to “ensure the efficient and affordable nationwide delivery of mail,” by giving the agency more flexibility for product development, consolidation of mail delivery and agency oversight, and most notably, addresses the pre-funded healthcare mandate.
The bipartisan legislation proposes the creation of postal specific health plans, which would require integration into Medicare.
“There is an onerous requirement on the part of the Postal Service to pre-fund its retiree health benefits to the tune of $5 billion year in a lump sum payment,” said Rep. Stephen Lynch (D-Mass.). “It has gotten us to a point where about 20 cents on every dollar that the Postal Service spends is spent on healthcare. At the same time, the Postal Service employees are paying, have been paying about $24.9 billion in Medicare but are not draining those benefits. So the idea here is to require the postal employees to begin to use Medicare. They’re already paying for it, but they’re just not using it.”
Health insurance has been a fiscal anchor for the Postal Service since 2006, when Congress required USPS to pre-fund health retiree benefits for postal workers.
To date, the agency has paid about $18 billion into the fund, according to the Government Accountability Office, but it’s missed about $28 billion in payments.
In a call with reporters, Jessica Klement, legislative director for the National Active and Retired Federal Employees Association, said the membership organization disagrees with the requirement, which is “couched as Medicare integration to make it sound better.”
About 30 percent of NARFE’s 220,000 members are retired postal workers, Klement said. Overall, the most popular question the organization’s federal benefits department gets is whether a person should get Medicare when they turn 65.
“For most people the answer to that is yes. If you look at the FEHBP population, over 75 percent of retirees who are eligible for Medicare have it,” Klement said. “However, individuals made the decision at 65 not to take Medicare, and at 75 they may be ok with the decision they made. We as an organization feel they should not have to take Medicare after they’ve retired to keep their federal insurance benefits in retirement.”
Running like a business
Postmaster General Megan Brennan in a statement called the draft “an important step” toward postal reform.
Brennan appeared before the committee earlier this year to lay out her plan to save the Postal Service $32 billion through fiscal 2020. Her plan included full Medicare integration, as well as bringing back the exigent postal rate increase that the Postal Regulatory Commission did away with on April 10, calculating retirement benefit liability using postal-specific salary growth, and allowing USPS more product flexibility.
Included in the draft legislation is a 1 cent increase for a First Class stamp. It also calls on the PRC to complete a full review mailing rates by January 2018.
Mail volume has declined by roughly 27 percent between fiscal 2007 and 2015, thanks in large part to the internet and mobile communication. First-class mail, the agency’s most profitable product, has declined by 35 percent.
The bill does not include a shift to 5-day service, but does centralize certain deliveries.
The draft requires “the incremental conversion to centralized delivery of business addresses identified by the Postal Service,” and requires the centralization of residential addresses where 40 percent of residents said they would move to to a cluster box delivery.
The bill also addresses pension funding reform by calculating the Postal Services pension costs and liabilities using assumptions specific to the USPS population instead of the governmentwide population.
One way the discussion draft addresses flexibility is by creating a chief innovation officer position.
Rep. Elijah Cummings (D-Md.), said the role of the CIO will be to oversee the development of new products and services “to enable the Postal Service to capitalize on new business opportunities.”
“If the Postal Service is to run like a business, it should have the flexibility all other businesses have to provide products people really want and need,” Cummings said.
Other things included in the draft bill include expanding the role of the PRC, creating a presidentially-appointed, 5-member Board of Governors — the current board has nine members — and combining the PRC and Postal Service offices of inspector general into one Inspector General for the Postal Community.
“This is not a perfect bill, but it is certainly a real giant leap forward in terms of postal reform, returning solvency to the system, and functionality and the probability of success,” said Rep. Gerry Connolly (D-Va.)
The draft is available online for comment for two weeks. Rep. Jason Chaffetz (R-Utah), chairman of the oversight committee, said members will then look at actually introducing a bill and having it marked up before the July recess.
“It’s time for us to push the envelope,” he said.
Chaffetz said he’d been working with Sen. Tom Carper (D-Del.), who introduced a bill in September that would create a new health benefits program specifically for postal employees and annuitants and require those eligible to enroll in Medicare.
“We’ve taken a lot of ideas from the Senate bill, I think it would actually be fairly close, but we’re gonna try to push and drive this maybe faster than they’re able to do it on their Senate calendar,” Chaffetz said.
Carper said in a statement said the House proposal “reiterates what those of us in the Senate who are serious about postal reform have long believed: the time to act is now.”