GAO: “DonahoeCare” would increase expenses for postal workers and retirees, shift billions in costs to Medicare

The Government Accountability Office today released its assessment of Postmaster General Pat Donahoe’s plan to force all postal employees and retirees (excluding himself and his fellow executives) out of the Federal Employee Health Benefit Program, and into a plan run by the USPS. The GAO report confirmed that the USPS would save money under the proposal, but that those savings would come from shifting costs onto taxpayers, employees and retirees, rather than from actual net cost reductions.

First the “good” news:

GAO estimated that at least 63 percent of postal enrollees in the selected FEHBP plans would pay similar or lower premiums under the USPS plan


… some employees and retirees could have higher total costs— premiums and out-of-pocket costs for the use of care—due in part to differences in deductibles and maximum spending limits.

And that 63% figure means that over a third of enrollees would get hit with higher premiums along with any increases in out of pocket costs for care.

And when you retire, it could get worse:

… postal retirees would no longer have the assurance that USPS’s contribution to the cost of health benefits would be fixed by law as it is within FEHBP.

Confirming the fact that DonahoeCare would be inferior to FEHBP doesn’t really require an expensive audit and analysis. If the plan really was, as the PMG continues to claim “as good as or better than” FEHBP, then why would the PMG insist on keeping FEHBP for himself and his top bureaucrats? We’re always being told that the USPS needs to pamper and reward its top executives or they will take their immense talents elsewhere. So why are they going to be shut out of this new improved DonahoeCare? The only logical explanation is the obvious one: contrary to the PMG’s claims, enrollees will end up paying higher premiums for inferior health coverage under his plan.

The GAO also seemed to be more than a bit leery of the PMG’s suggestion that the USPS might take the money that’s already been set aside for future retiree health benefits ($46 billion at last count) and play the stock market with it:

Under one option of USPS’s legislative proposal, the existing Postal Service Retiree Health Benefits Fund (PSRHBF) would be transferred into a newly created Postal Service Health Benefits Fund (HBF). Assets of this new fund could be invested in stocks, private sector bonds, and other non-Treasury securities exposed to risk.

Which, the GAO noted, would mean that a stock market downturn could drastically reduce the amount of money available for health insurance. The GAO also had a problem with a provision in the USPS plan that would allow that $46 billion to be used for purposes “other than USPS retiree health benefits”.

The reality of the PMG’s cost-shifting won’t come as a big surprise-it was after all, confirmed over a year ago at a congressional hearing by none other than Darrell Issa- here he is speaking directly to Donahoe:

I am probably going to support your doing this, but let’s have no illusions: you are just cost-shifting. There is no real cost savings to the American people. The money in fact will be paid out of one hand in order to save out of another hand.

When Darrell Issa of all people is giving you lectures about honesty you know you’re in trouble.

via U.S. GAO – U.S. Postal Service: Proposed Health Plan Could Improve Financial Condition, but Impact on Medicare and Other Issues Should Be Weighed before Approval.

  • Rotbart59

    Donahoe is a disgrace to the USPS and a traitor to all employees and retirees. Isn’t it convenient that he and his corporate lackeys are not obligated to participate in this plan that he touts as better for everyone. I worked for 30 years with the agreement I would have adequate health care and now after the fact he wants to change the rules. I would like to tell him what to do with his plan. It wold be the same thing I told him to do with my retirement certificate when I mailed it back to him.

    • Mail Clerk

      Beware if Cliff Goofy is re-elected as APWU president, he’s for DonawhoreCare because the APWU plan is in their giveaway CBA.

  • OverWorkedPSE

    Hmmmmmmmm DonahoeCare, nope sounds suspect to me thee OverWorkedPSE!!!

  • Burt Lancaster

    Oh, our fearless leader…Just put us all on ObamaCare rather than DonahoeCare, you know you want to…..

  • annie

    take USPS out of the Federal Health and we are doomed.
    The USPS will go private and offer no health care and pay a fine of $2000 per employee instead of the aprox $10,000 they pay now per employee.. SAVE US FROM DOOM….

  • annie

    We have the best health care…. we are DOOMED if we are taken out of the FEDERAL HEALTH CARE SYSTEM

  • You won’t let me

    Once they take us out and then they bankrupt and privatize us they will say like any private company that goes out of business you lost ALL your former benefits and your PENSION. Beware


    Donahoe = PHYSCO

    • Dawn Grammatical Error


  • Chris

    Donahoe if you are reading this, leave the postal service for good! you are ruining it! If you were doing your job you would lobby only to allow the USPS to quit paying into the prefunding account and leave it at that….middle management is what is ruining us why don’t you help us all out and take a paycut and get rid of overspending but honestly the greatest legacy that you will leave the postal service is your exit.

  • Tom

    DonaHOE do us all a favor and jump from the tallest building in DC and take the lackeys with you

    • hollywood

      It would be a good start to fixing the USPS .

  • Angelo

    This is one of the reasons, why the postmaster general and his executives should be fire from the USPS.Whats good for one, should be good for all including the bunch of idiots that have this organization in a position loosing 22 million dollars a day.

  • JIM

    The article doesn’t mention the fact that taking the largest group of employees out of FEHBP will increase premiums and costs for all federal workers. It would make more sense to open FEHBP to the public and add more users reducing costs for all. Buying insurance without a group is a nightmare for many and there would be lots of interest .