The House of Representatives will be considering a postal reform bill this week on the floor. However, there is a significant issue with the bill as the language contains a back door bailout to cover the health care costs of United States Postal Service (USPS) employees. Republicans might want to read the bill again to make sure they cast a vote in support of well-intentioned efforts to help the post office become less unprofitable and hastening the insolvency of Medicare in the process.
It is good that Congress is trying to find ways to be bipartisan and move legislation to solve the problems facing the Postal Service. Postal reform is one area where the American people and Congress can find common ground. The main issue with this proposal is that the bill contains a provision that will help the postal service at the expense of elderly recipients of Medicare. A result of implementing this could lead to more pressure on Congress to hike taxes to pay for Medicare recipients who are in a program destined for insolvency in the near future.
A significant number of Republicans in the House have jumped onto the Postal Reform Act of 2022. This bill lowers the USPS expenses for federal health insurance benefits for postal employees and retirees by transitioning these people off their health plan and into Medicare. This is an accounting gimmick which will end up hurting existing Medicare recipients as well as the USPS retirees.
It is a bit complicated, but this is how it works. The legislation creates a new Postal Service Health Benefits program under the Federal Health Benefits program (FEHB). The FEHB has been integrated with Medicare Parts A, B, and D. It is odd that this bill has set up a unique program within the FEHB just for postal employees.
The USPS has been losing money for years, even with a CARES Act bailout to the tune of about $10 billion — with a net loss of $4.9 billion last year. While dumping employees into Medicare makes sense for the USPS, Chris Jacobs pointed out at The Federalist on February 2, 2022, “forcing postal employees into the Medicare program would definitely lower the Postal Service’s obligations for retiree health care. But the proposal would shift individuals from a postal retiree program scheduled for insolvency in 2030 into a Medicare program scheduled for (official) insolvency in 2026.” He compares this idea to “shifting deck chairs on the Titanic,” because Medicare is in grave danger of going belly up and putting pressure on Congress to hike taxes to pay for new obligations because of increased expenditures as the population ages.
The Congressional Budget Office (CBO) estimated in July of last year that this bill will hike Medicare expenses by $5.6 billion in the next 10 years. Taking over five billion off the books of the postal service will also take the pressure off them to reform the service. Postmaster General Louis DeJoy testified before Congress last year that the USPS had experienced 14 consecutive years of losses with a staggering $9.2 billion lost in 2020 with a forecast of losing $160 billion over the next ten years. Taking health care retirees off the books of the postal service is not reform and will merely mitigate the losses and reduce the necessity to engage in real reform.
The CBO report shows that this is a lose-lose proposition for the taxpayers. The fact is as Medicare moves closer to insolvency, there will be immense pressure on politicians to raise taxes — cutting into the paychecks of working Americans. It is clearly unintentional on the part of Republicans supporting this effort and many may not have closely studied the ramifications of the language to notice an unintended consequence of including that provision may be tax hikes. And no Republican will be happy when they get pressure to hike taxes or reduce the benefits for seniors.
This bill is bad for Medicare and bad for postal reform. As usual, Congress’ well intentioned attempt at postal reform needs reform. Any idea that merely shuffles deck chairs on the Titanic in the name of bipartisanship, puts a Band-Aid on real reform efforts and only merely delays the inevitable for the USPS.
Peter Mihalick is former legislative director and counsel to former Reps. Barbara Comstock, Virginia Republican, and Rodney Blum, Iowa Republican.