Congress should require the Postal Service to get its fiscal house in order, not come to a bankrupt Medicare system for a lifeline.
Congress should require the Postal Service to get its fiscal house in order, not come to a bankrupt Medicare system for a lifeline.
A s President Biden’s March 1 State of the Union address draws near, Democrats on Capitol Hill are increasingly desperate to get some legislative wins and put points on the board for voters. Last week, the U.S. House of Representatives passed a “China bill,” echoing the work that’s already been done on a bipartisan basis in the Senate. Shortly after that, lobbyists and conservative activists have been alerted that Speaker Nancy Pelosi will take up postal reform via H.R. 3076, the “Postal Service Reform Act of 2021.”
“Postal reform” has long been up there with “fisheries reauthorization” and approving the prior day’s journal as among the most boring and least notable things Congress does from time to time. This round, however, the Democratic majority — with the help of over 44 Republican co-sponsors — is using postal reform as a Trojan horse to sneak billions of dollars in additional unfunded liability into to the Medicare program.
Under current law, all federal employees are free to enroll in the Federal Employee Health Benefit (FEHB) program as retirees, continuing the coverage they had when they were working. Although most choose to do so, federal retirees can participate in FEHB without enrolling in Medicare Parts B (doctor visits) and D (prescription drugs) — a savings for the Medicare system, since the FEHB pays for those things. Because they are federal employees, retirees of the United States Postal Service (USPS) receive those options, too.
H.R. 3076 changes this arrangement for postal retirees alone. Under the new law, in order to keep FEHB coverage in retirement, postal workers need to enroll in a new postal-only health plan that requires retirees to enroll in Medicare. This relieves the Postal Service of having to pay for a large portion of a retiree’s health expenses and dumps those costs on the Medicare trust fund instead. According to the Congressional Budget Office, Medicare spending would increase by $5.6 billion over the ten-year budget window.
In case you’ve forgotten amid the last several years of unlimited federal government check-writing, we have an entitlements crisis. According to the Centers for Medicare and Medicaid Services’ annual actuaries report, spending on Medicare is already projected to grow from 4 percent of the economy today to 6.5 percent of the economy by the end of this century. In today’s dollars, that’s like increasing annual Medicare spending from over $900 billion to $1.5 trillion each and every year. The consequence of the growth will amount to some combination of harsh benefit cuts for those who cannot afford them, massive tax increases for working families, and/or nightmare levels of national debt.
It doesn’t help when a postal-reauthorization bill (which has its own series of concerns unrelated to entitlement reform) makes the Medicare unfunded-liability problem worse. Some might ask why this matters. After all, aren’t we just shifting money from one government pocket (the Postal Service) to another (Medicare)?
The reason it matters is because under current law, the Postal Service is required to pay back taxpayers ahead of time for the cost of retiree health insurance. H.R. 3076 relieves them of a huge portion of that responsibility by letting the post office dump retiree health costs on a Medicare system that’s on the verge of insolvency and taxpayer bailout. On top of that, the Postal Service will no longer be obliged to pre-fund its share of health benefits, another windfall on top of the Medicare assumption of costs.
If all this talk of postal bailouts sounds familiar, it should. The Postal Service received a special $10 billion appropriation in the CARES Act of April 2020, to weather the effects of Covid-19. This was granted despite the fact that over the past decade, the Postal Service has run a cumulative deficit of nearly $67 billion.
The Postal Service is supposed to be a self-funded operation. It’s not supposed to need direct appropriations from taxpayers or indirect bailouts in the form of Medicare picking up the tab for much of the USPS’s retiree health expenses. Congress should require the USPS to get its fiscal house in order, not come to a bankrupt Medicare system for a lifeline.