Postal reform bill could raise FEHBP premiums

Proposals to reform health and retirement benefits for Postal Service employees have been rolling around Capitol Hill for years. But one such bill, now pending, actually could pass—and according to critics raise federal health insurance premiums, an unwelcome prospect.

Proposals to reform health and retirement benefits for Postal Service employees have been rolling around Capitol Hill for years. But one such bill, now pending, actually could pass—and according to critics raise federal health insurance premiums, an unwelcome prospect.

The bill, the Postal Service Reform Act of 2021 (H.R. 3076/S. 1720), would create an entirely new health insurance system for USPS employees, called the new Postal Service Health Benefits (PSHB) program. Like its name, the new program would resemble in many respects the Federal Employees Health Benefits Program (FEHBP) that covers postal workers and civil servants.

The legislation and the PSHB options would create new, separate choices for health insurance, available to active and retired postal workers.

In theory, creation of the plan would find favor from postal employees and federal civil servants alike. Problems with the current structure of benefits for postal workers—not least years of onerous charges to “pre-fund” retiree health benefits, a longtime problem finally resolved in the reform bill—long have dogged USPS balance sheets and headlines about the quasi-governmental service. In short, all working people across government and the Postal Service have an interest in solving these problems, and in fairer pay and benefits for their fellows.

But the details of the new PSHB, as laid out in the bill, also might create new burdens—for feds across the board, as pointed out in a critical release issued by the major fed advocacy group National Active and Retired Federal Employees (NARFE). The group points out that the new way health premiums and risks would be calculated for postal employees would likely also raise prices across the board for the millions of federal civil servants and family members covered by FEHBP.

“For example,” FEHBP notes in the release, “there would be a Blue Cross Blue Shield Standard plan for feds and a separate one for postal employees and retirees. The bill requires coverage to be ‘actuarially equivalent,’ so that each plan covers a similar amount of expected costs.”

This requirement for an actuarial equivalent, a term of art in the insurance business, along with further details of the plan governing how postal workers of different ages and health would be covered under PSHB, FEHB and Medicare Part B, would lead to a net result of higher FEHB premiums for all enrolled in it, according to NARFE.

Because the bill currently contains this threat of higher premiums for all federal civil servants, NARFE has come out against it—unless the proposal is significantly altered.

“It is NARFE’s position that the creation of a new program should retain all postal employees and retirees, rather than singling out and excluding retirees without Medicare, a move that could set a dangerous precedent for the future of the FEHB program,” the organization stated. “NARFE is continuing to work with lawmakers to address these concerns prior to any further movement on this bill.”

“If these concerns are not addressed adequately, NARFE would urge opposition to this or any other bill that undermines the earned health benefits of our nation’s current and former public servants,” the group concluded.

NARFE’s president, Ken Thomas, sent a letter containing the group’s concerns to the Senate Homeland Security and Governmental Affairs.

“NARFE appreciates the efforts the committee has taken to ensure choice for postal retirees regarding enrollment in Medicare Part B, a longstanding concern we have had with postal reform,” Thomas wrote, lauding parts of the proposed changes. “The improvements included in this bill are critical to honoring commitments made to postal retirees in exchange for long careers of service.”

But Thomas went on to highlight NARFE’s concerns about the potential for higher FEHB premiums—and other issues that might force some current postal retirees to have to find a different physician or medical provider, as their current practice may not honor one or the other of the insurance providers imposed by the coming changes.

NARFE, while lobbying for changes in the legislation, is meanwhile also soliciting pressure for the same from its members and other federal employees and stakeholders.

“Contact your lawmakers and ask that they withhold support for the legislation until a full analysis of the bill’s impact on the FEHB program is assessed,” the group stated in the release.

 

 

 

 

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