Fed unions say DonahoeCare would "destabilize the FEHBP and raise costs for federal employees, retirees, and their families"

Postmaster General Pat Donahoe’s proposal to yank postal workers (excluding himself and a few other privileged folks) out of the Federal Employee Health Benefits Program has drawn the ire of three unions that represent non- postal federal workers.

The National Treasury Employees Union, American Federation of Government Employees, and the National Active and Retired Federal Employees Association have jointly sent a letter to members of the Senate committee that oversees the USPS criticizing the Senate bill, S.1486, that would authorize Donahoe to proceed with his plan.

The unions note that the bill would

“allow the United States Postal Service (USPS) to cherry pick the largest areas of cost savings from FEHBP, which will destabilize the FEHBP and raise costs for federal employees, retirees, and their families. The Office of Personnel Management has estimated that as a result of these provisions, premium increases for employees and retirees remaining in the FEHBP would be 2 percent across the board and could be as high as 35 percent for some plans.”

Here’s the full text of the letter:

Dear Member of the Senate Homeland Security and Governmental Affairs Committee:

On behalf of the federal employees and retirees represented by the undersigned organizations, we write to express our serious concerns about the health insurance and Federal Employees’ Compensation Act (FECA) provisions of S.1486, the Postal Reform Act of 2013, which will impact all current and retired employees.

Section 104 of S.1486 will provide the Postmaster General (PMG) with extraordinary authority to withdraw active postal employees from the FEHBP – approximately 25 percent of FEHBP’s enrollment. Section 105 incentivizes Medicare eligible postal annuitants with Medicare Parts A and B to elect a newly established, voluntary Medicare wraparound plan. The FEHBP keeps costs low by spreading risks among all its participants; however, the effect of Sections 104 and 105 allow the United States Postal Service (USPS) to cherry pick the largest areas of cost savings from FEHBP, which will destabilize the FEHBP and raise costs for federal employees, retirees, and their families. The Office of Personnel Management has estimated that as a result of these provisions, premium increases for employees and retirees remaining in the FEHBP would be 2 percent across the board and could be as high as 35 percent for some plans.

Section 502 would amend the Federal Employees’ Compensation Act to reduce benefits when injured workers reach the Social Security retirement age. Currently, an employee who is injured on the job and unable to work receives FECA payments equal to 67 or 75 percent of wages at the time of injury. Under S.1486, these workers would have their insurance reduced to 50 percent of their former wages. Forcing a worker at retirement age to give up regular FECA benefits earned as a result of an on-the-job injury would cause grave economic hardship to many disabled employees. This was recently documented in a Government Accountability Office report (GAO 13-108) that showed these cuts would negatively impact lower wage workers and those injured early in their work-life.

Section 503 would eliminate the FECA family benefit that provides a modest additional 8 percent of former wages. This is not a complicated program to administer. It does not compensate for the tragic emotional burden a head of household must suffer having lost his or her ability to continue as the breadwinner for his or her children. But it does provide some modest additional payment so former family breadwinners can still provide some material support for their dependents.

In summary, the health insurance provisions of S.1486 will undermine the successful, long- standing Federal Employees Health Benefits Program (FEHBP) and increase costs for millions of federal employees, retirees and their families. These proposed changes are especially problematic given that many federal employees have already been driven to the brink by furloughs and wages that have been stagnant for years. In addition, the draconian FECA provisions are federal government wide and have no place in Postal Service reform legislation.

Sincerely,

National Treasury Employees Union
American Federation of Government Employees
National Active and Retired Federal Employees Association