The Postal Service’s newly announced reorganization plan seeks relief from several employment-benefits related funding obligations and further seeks to shift some costs of retiree health care onto the Medicare program, all proposals that have been mentioned repeatedly over the years as potential steps to improve the agency’s finances.
The plan, involving a combination of lower service standards, higher prices and operating changes, is sure to be controversial and will set off another round of hearings in Congress since many of the proposals would require changes in law.
“Our business and operating models are unsustainable and out of step with the changing needs of the nation and our customers. We have seen steep annual financial losses in the billions of dollars, unmet service performance goals, and less market relevancy as consumer behaviors have changed,” it says, projecting that without reforms annual losses will grow from $9.7 billion in 2021 to $23.3 billion through 2030.
In addition to repeating a call to end the FEHB pre-funding requirement, the plan also again calls for creating a postal-only health plan within the FEHB that would be “would be fully integrated with Medicare.” Retirees who keep FEHB coverage, as most do, currently have the choice of enrolling or not in Medicare Part B—which covers various non-hospital expenses, many of them duplicative of FEHB coverage and at the cost of additional premiums. Currently about a quarter of postal retirees do not enroll in Part B when they become eligible, it says.
Under the proposed arrangement those who retire in the future would be required to enroll in Medicare Part B, which would become the primary payer with FEHB the secondary payer. Unlike some similar past proposals, though, if approved it would not apply to those already retired as of the effective date.
The plan also calls for relief from a retirement benefits funding obligation related to retirees who worked for the USPS before it became a semi-independent entity in the early 1970s.
For employees, it seeks to “expand programs that support career planning, expanded training and self-development, and opportunities for growth, advancement, and promotion”; reduce turnover among non-career employees; and expand safety programs, among other steps.
No changes in employment levels were specified, although the plan raises the possibility of closing branches of city post offices into nearby full-service retail post offices, shortening retail hours and other steps that could have an impact on job levels.