Postal Service Reform Act Could Raise Health Insurance Premiums for Federal Workforce

The Postal Service Reform Act of 2021, introduced in the House by House Oversight and Reform Committee Chairwoman Carolyn Maloney (D-NY) and Ranking Member James Comer (R-KY), could raise health insurance costs for both employees and retirees in the federal workforce. A Senate companion bill was also introduced by Homeland Security and Governmental Affairs Committee Chairman Gary Peters (D-MI) and Ranking Member Rob Portman (R-OH).

The bill would make significant changes to the Federal Employees Health Benefits Program (FEHBP) and could raise FEHBP premiums for some feds. The legislation would divide the FEHBP and separate 2 million postal workers and retirees from the federal program.

However, employee advocacy groups are urging Congress to gather more information about the ramifications of the proposal before moving forward. Jessica Klement, Staff Vice President of Policy and Programs for the National Active and Retired Federal Employees Association (NARFE) explained that Congress should not move forward with the bill until the Office of Personnel Management (OPM) has had the opportunity to conduct an analysis of its effects on health premiums for the wider federal community.

John Hatton, NARFE’s Legislative Director, furthered, “For those who don’t have Medicare, they’re older, they’re age 65 or [more], and you don’t have Medicare picking up the first dollar of coverage for you. Those costs to the FEHB program are much higher than average, and premiums are based on average costs. If you’re pulling out people who are less costly to insure and keeping those others who are more in the FEHB side, it could cause an increase in premiums.”

The bill is expected to save USPS nearly $56 billion over the next 10 years by eliminating the 2006 pre-funding mandate and requiring future postal retirees to enroll in Medicare Part A and Part B. The bill would also require USPS to post weekly service data on its website and issue a finance and operations report to Congress every six months.

Senator Portman said the bill would “help turn around the substantial losses at the Postal Service over the last decade and ensure self-sustaining, high-quality postal service for all Americans.”