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.