S.1789 Ends Use of Postage to Subsidize Federal Health Benefits

The Hill has reported that Federal Employees will likely see an increase in their health insurance premiums if Postal Service employees and retirees are removed from the Federal Employee Health Benefit Program. The increase in premiums for Federal Employees suggests that current law effectively transfers funds from the Postal Service, and its ratepayers, to the Office of Personnel management to cover costs of health benefits for federal employees.

While the size of the total subsidy is unknown, the information that the Hill article presents suggests that at a minimum, the Postal Service’s participation in FEHBP reduces every Federal employee’s premium by at least 2%. Ending this subsidy would seem to be a good idea for both mailers and postal employees and would remove another transfer from the Postal Service to the federal government.



5 Responses to “S.1789 Ends Use of Postage to Subsidize Federal Health Benefits”

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  1. M. Jamison says:

    No, what this suggests is that the couple of million extra bodies in the Federal Health insurance pool have a salutary effect on the actuarials. It has nothing to do with subsidies of any kind.
    The fact is that if the Postal Service sets up its own system it’s employees will pay higher premiums due to a smaller pool. Go back and read the information on this and you’ll see that you are way off base (again).

  2. tom says:

    I pay triple what my friend pays and he works for the small city of decatur. Why a company this size cant do better is crazy. I know a guy that work for a crane compay pays 100 every 2 weeks.

  3. iheardthisbefore says:

    What an absurd idea.
    The USPS only has Postage and Fees for a REVENUE STREAM from which to pay Salaries, Benefits and necessary agency expenses….and the CONCEPT that ANY of this cash flow is a “SUBSIDY” of any sort is RIDICULOUS.
    This ridiculous idea SMELLS LIKE A TEA PARTY NOTION and as such, needs a really hard second look at it’s CENTRAL LOGIC as most of the ENTIRE TEA PARTY AGENDA DOES.

    • Alan Robinson says:

      Not a tea party notion at all. Costs of other Federal health benefits would go up only if 1) the other plans lose some economies of scale that causes them to spread overhead costs over fewer policies; 2) the othe plans pools remaining members have higher medical costs than the USPS employees that are leaving, this is an adverse selection issue and there is some indication that the opposite is true; or 3) USPS employees are more likely to use the FEHBP as a secondary insurance particularly when they are retired which would lower their costs compared to other federal employees.

      I don’t buy the first with the exception of some of the smaller USPS union plans that may have too much administrative overhead if membership drops significantly. The other two both suggest that the USPS costs of insurance/employee is less than that of other Federal employees. If so, staying in the plan raises USPS costs compared to what the costs would be if they hired BC/BS Aetna or any other insurer to provide the insurance to employees.

    • uncommonsense says:

      20+ billion dollars per year of USPS revenue flow to the federal government on the way to being paid out as postal “expenses”.
      The federal government pools all employee expenses of the USPS and the federal government and decides how much of the expenses are the governments’ and how much are the USPS’s. If you don’t think the government calculations produce a figure that says the postal service’s share of expenses is higher and the governments share is lower than they are in reality you are very naive.

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