Splitting of FEHB Population Again Considered

Backers of a plan to revamp many aspects of Postal Service operations have said chances of passing those long-stalled reforms have improved following a Senate hearing on the latest version (S-2051). That measure contains many of the same proposals that have made only partial progress on Capitol Hill in recent years, although tweaked to take into account objections that have helped doom the prior efforts. It would set up a separate health insurance program within FEHB covering only postal employees and retirees, with the expectation that coverage terms for them be more or less comparable to what is provided now, but also with the expectation that the new system be less expensive to USPS as an employer–two intents that some experts have said are incompatible. Another result would be to split off a large segment of the premium pool, with unknown impacts on premiums for the rest of the FEHB population. It also would require postal retirees to take Medicare coverage, including in its voluntary prescription drug program. That in effect would shift certain costs away from the Postal Service-only plan and onto Medicare, which is the first payer when an enrollee also has other health insurance. Many, but not all, retirees with FEHB also take Medicare when they become eligible, typically at age 65; each program does cover some costs the other doesn’t, but they are duplicative in many ways and the drug benefit of all FEHB plans is generally considered much superior to Medicare Part D. Other aspects of the bill include reducing and stretching out the obligation that USPS pre-fund its future costs for retiree health insurance. USPS has not been able to make those payments in recent years, which are a major contributor to its annual financial losses and its accumulated debt since they remain on the books as an obligation.