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Federal Eye
Posted at 06:00 AM ET, 10/10/2011

Health care is making the postmaster general angry


Postmaster General Patrick R. Donahoe testifying to a Senate committee in September. (Andrew Harrer - BLOOMBERG)
Eager to find ways to cut costs for the U.S. Postal Service, the nation’s postmaster is so eager to get out of the federal government’s health-care plan that he’s getting angry about it.

Eye Opener

Fed up with paying about $7.3 billion annually in health care for postal workers, retirees and dependents, Patrick R. Donahoe is pushing plans that would allow USPS to spin out of the Federal Employees Health Benefits Program and establish a separate postal health care system.

If Congress agreed to the plans — a big if — Donahoe expects USPS could save about 10 percent in health care costs annually, a hefty chunk of change at a time of billion-dollar losses, but an expense that some analysts predict could result in higher premiums for postal workers.

During an interview late last week, Donahoe was clearly annoyed and angry with the Obama administration and Congress for not endorsing his plans to remove USPS from FEHBP — a massive program providing an array of options for life insurance and health, dental, vision and long term care based on a worker or retiree’s occupation, labor union and geographic location.

“How do you manage 200 health care plans effectively?” Donahoe asked in reference to FEHBP’s various options. “There should be one plan for the federal government, then we’d really get — not only could we prefund, we’d probably get a refund.”

Donahoe’s mention of prefunding is in reference to a 2006 law that requires the Postal Service to pay about $5.5 billion annually to prefund future retirements of postal workers — an expense he said “that has killed us financially.”

“They can get their own plan,” he said of the federal government, waving his hands and at times pounding his hand on a nearby table for emphasis. “I could care less about them, truthfully. While we’re standing around holding this $5.5 billion millstone, I didn’t see anyone helping us out. Now we’ve come in with a new plan and they say, ‘Oh, you can’t do that.’”

Well, not quite. The White House and lawmakers are calling for studies of the Postal Service's proposals before endorsing them — but in Washington, “further studies” of an issue can often lead to years of delay or an impasse.

Asked in the interview about the ongoing mail volume declines, Donahoe reiterated a line he’s used frequently in recent weeks: That the Postal Service’s current woes best match the fates of Kodak and Fuji, formerly the two largest manufacturers of camera film.

“Ten years ago people were arguing whether Kodak or Fuji made the best film. Today, people say, what is film?” Donahoe said. “That big technology change – with digital cameras – that’s caught on much faster than online bill payment. You can’t buy a camera that takes pictures with film anymore, I don’t think. You can’t buy film.

“So on a longer trend, first class mail is facing the same issue, probably a 20 to 25-year end of life, versus seven or eight that we saw with film,” he said.

So will there come a day when first-class mail volume drops to zero?

No, according to Donahoe. “We think it will probably settle out maybe at at 20 billion pieces of mail in a year, and slow but sure, drop from there. I mean, with electronic bill payment and bill presentment and what not, you know?”

Follow Ed O’Keefe on Twitter: @edatpost

Further reading:

Would a USPS health-care plan really work?

Postal Service launches new TV ad campaign

For more, visit PostPolitics and The Fed Page.

By  |  06:00 AM ET, 10/10/2011

Categories:  Eye Opener, Postal Service

 
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