Plan to Fix Postal Service Shifts New Retirees to Medicare — Along With Billions in Costs

A congressional effort to repair the nation’s deteriorating mail service could come on the expense of an excellent larger and extra sophisticated drawback: Medicare solvency.

The Postal Service Reform Act of 2022 would assist shore up publish workplace funds by ending the weird and onerous authorized requirement to fund 75 years of retirement well being advantages prematurely. In return, it will require future Postal Service retirees to enroll in Medicare.

In keeping with the Congressional Budget Office, the transfer may save the postal retirement and well being packages about $5.6 billion via 2031 whereas including $5.5 billion in prices to Medicare throughout that span, and doubtless rather more in later years.

Contemplating the large measurement of Medicare — it spent $926 billion in 2020 — the prices don’t quantity to a lot. That small monetary affect, and the continuing fast crises with mail supply, in all probability account for the robust bipartisan help the postal invoice has obtained in Congress, with 120 Republicans becoming a member of Democrats to pass the bill in the House on Feb. 8.

However late within the course of, some lawmakers are elevating alarms over the transfer, arguing that perhaps Congress ought to look extra fastidiously on the monetary affect to Medicare’s belief fund, which is anticipated to run dry in 2026.

“This invoice merely shifts danger to Medicare recipients by including billions of latest prices to Medicare,” Sen. Rick Scott (R-Fla.) mentioned Feb. 14 in blocking requests on the Senate ground to expedite passage of the invoice. Scott’s objection delayed consideration of the invoice till early March, after the Senate returns from its Presidents Day break.

At the moment, Postal Service staff are coated by plans provided within the Federal Staff Well being Advantages program. After they retire they’ve a number of selections for well being care, together with staying of their authentic plan or switching to Medicare as their main protection and having an FEHB plan function supplementary protection. About 20% of postal retirees don’t join Medicare, preferring their present federal plan. Underneath this laws, they must swap to Medicare, however they might preserve a brand new Postal Service model of the FEHB plan as secondary protection.

For the reason that change wouldn’t totally take impact till 2025, and the Congressional Funds Workplace’s price estimate doesn’t seize a full decade, Scott needs to know the worth tag for the following 10- and 20-year durations, in addition to the precise impacts on the assorted elements of Medicare, similar to premiums for Medicare’s Half D drug plan and the Part B program, which covers a wide range of outpatient providers.

The general price is prone to be rather more important than the shorter-term evaluation discovered, mentioned Robert Moffit, a senior fellow on the conservative Heritage Basis, who has additionally raised considerations.

“There’s a whole price that’s being ignored,” Moffit mentioned. “You principally have a scenario the place you may have unfunded liabilities within the Postal Service Well being Advantages Program, retiree advantages, that quantity to about $75 billion.”

That projected price doesn’t vanish. It falls on Medicare, although the precise affect is unclear. Moffit agreed with Scott that Congress needs to be longer-term implications, together with results on premiums and the prices borne by taxpayers and beneficiaries.

“We must step again, take a deep breath, and have a look at what we’re doing right here,” Moffit mentioned.

Postal Service unions will not be frightened in regards to the change, nonetheless, with all of them supporting the swap, famous Democrats who responded to Scott earlier this month.

Senate Majority Chief Chuck Schumer argued that the invoice would save the federal government cash general, and that transferring postal retirees into Medicare would be sure that they obtain advantages they’ve paid for however weren’t utilizing.

For Schumer and most different lawmakers, the comparatively small affect on Medicare is just not as urgent as getting the mail delivered on time.

“We are going to move this invoice as a result of America wants it. Rural folks want it. Senior residents want it. Veterans want it — 80% of the veterans’ prescriptions are despatched via the mail,” Schumer mentioned. “No person needs to be standing in the best way of this invoice.”

Scott is now amongst a minority objecting to the most recent effort and pointing to Medicare.

Others who stay involved about Medicare’s poor funds additionally thought fixing the issues with postal supply was value the associated fee to Medicare.

“I might let Congress have a small win right here and, actually, this isn’t only a small win,” mentioned Mary Johnson, a Social Safety and Medicare coverage analyst on the Senior Residents League advocacy group.

She mentioned the failures of the mail system even have well being penalties, with funds for insurance coverage and shipments of prescriptions going lacking, which has occurred to her.

The shift to Medicare envisioned within the laws may add to the sense of urgency — all these retired postal staff can be becoming a member of Medicare simply in time for a solvency disaster if Congress drags its toes. “It’s inaction in Congress that may trigger that,” Johnson mentioned.

Johnson famous it will likely be troublesome to achieve a bipartisan consensus on one thing as momentous as Medicare reform. “You’re going to should move one thing, and it depends upon who’s the bulk. It might not be very fairly when it occurs.”

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