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Daily Dose: Could and Should USPS Pull Out of FEHBP?

We all know by now that the U.S. Postal Service is struggling to get by. It lost $8.5 billion last year, and earlier this summer here on GovLoop we debated the merits of cutting back to 3- or 5-day mail delivery instead of the customary 6. Another solution being floated would involve disenrolling all postal service employees from OPM’s Federal Employees Health Benefits Program, or FEHBP, and instead insuring them through a USPS-run benefit.

Regarding employee health insurance, Postmaster General Patrick R. Donahoe said in an interview that a key question for USPS is, “How do you control health-care costs going forward?” Currently, the Postal Service spends $7.3 billion on heath care for employees, retirees and their dependents.

“If we take over our own plan, cover 1 million people, employees and retirees, the experts tell us you can cut your costs by somewhere between 8 to 10 percent.”

Would a USPS health-care plan really work?

The downside of such a move, according to critics, is that cost savings to the postal service would actually be passed along to employees in the form of higher premiums, copays, etc. And at least one economist predicts that savings would be wiped out by USPS’s inability to administer the new system efficiently.

There are a lot of questions wrapped up in this proposal: for example, if USPS pulls out, would other agencies follow suit? Is the FEHBP a drain on taxpayer dollars? Would the new system be able to compete with the existing one by offering health benefits at a lower cost, and if so, would the quality of care suffer as a result?

Should the postal service switch employees to an in-house health insurance program?


“Daily Dose of the Washington Post” is a blog series created by GovLoop in partnership with The Washington Post. If you see great a story in the Post and want to ask a question around it, please send it to [email protected].

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