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Postal Service may withdraw from federal health benefits program


The United States Postal Service is expecting to run out of cash again – real soon.After the loss of another $740 million in the past quarter, and $3.9 billion over the course of the current financial year, post office watchers are predicting that the cash to run the quasi-government agency could run out in October.

Just add this impending crash to the must-resolve problems waiting for Congress when they return from their traditional August recess.

On the House side, House Government Oversight and Reform Chairman Darrell Issa has passed Postal Reform legislation through his Committee that awaits floor action.

With this action, the clock is ticking, and the problems are multi-fold.

First class mail usage is down by more than half in the past decade, and increasing rates have only served to discourage use of the mail further.  Supplanted by email, texting, online banking and social media, the Constitutionally mandated Post Office is struggling to find its identity in a 21st century world.

A struggle which is made virtually impossible due to legal restrictions which the USPS uniquely faces due to its quasi-government status and the need to get Congress to act to make adapting structural changes that other businesses take for granted.

USPS chief financial officer Joe Corbett contends in an article in Post and Parcel that, “We need to make fundamental changes to the way we currently do business, changes that are part of our Five-Year Business Plan.”

“However, without comprehensive postal reform legislation signed into law, our hands are tied and we expect multi-billion dollar annual losses to continue.”

Postmaster General Patrick Donahoe argues for the bold step of withdrawing from the Federal Employees Health Benefits Program and negotiating a new less costly plan with the union noting, “An astonishing 20 cents of every revenue dollar the Postal Service takes in must go toward health care costs.”

In fact, the significantly underfunded retiree health system is at the heart of the current shortfall facing the Postal Service.   The situation got so bad that in 2006 Congress mandated that the USPS must fully fund its retiree health plans through ten catch up annual expenditures of $5.5 billion through 2017.

This spending mandate was necessitated by a recognition that taxpayers would likely be on the hook for bailing out the generous postal worker retiree health system due to past decisions by the USPS to not fund this obligation.

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