NAPS Leg/Reg Update – April 2, 2012
Senate and House lawmakers are now home for their two-week recess. The Senate headed home last week for the Easter/Passover holiday period after a week of fits and starts on postal legislation, including a failed cloture vote. When lawmakers return to the nation’s capital on April 16, they will have only a month to pass legislation before a moratorium on processing plant and post office closures expires on May 15. Action by both chambers on postal legislation within the next month is unlikely, but Senate action remains a stronger possibility.
Last week, the prospect of Senate action on postal legislation was like a roller coaster ride. Early Monday, Senate Majority Leader Harry Reid (D-NV) appeared intent on bringing postal reform legislation to the floor. By noon he had reversed course and turned the Senate’s attention to energy tax legislation, expecting Senate Republicans to resist. Instead, Reid found them welcoming the opportunity to decry rising gas prices and keep the spotlight on the Democrat’s frayed energy policies. When Reid attempted to reverse course yet again and bring the postal legislation back to the floor, Republicans resisted, and were joined by a handful of Senate Democrats who also are unhappy, for various reasons, with the shape of the Postal Service.
The bill that Reid wanted to bring to the floor (called a “manager’s amendment” of S. 1789) was largely the result of a deal negotiated with Sen. Bernie Sanders (I-VT) that would largely preserve current 1-3 day delivery standards and minimize the closure of rural post offices, as well as create a blue ribbon commission on a new postal business model. These changes to the bill are actions that NAPS fully supports.
But six Senate Democrats joined with most Senate Republicans in blocking action on the postal bill, which failed on a 51-46 cloture vote on Tuesday, nine votes short of the necessary 60 votes to begin debate (and the consideration of amendments). Those six Democrats included Senators Max Baucus (D-MT), Jeff Merkley (D-OR), Ben Cardin (D-MD), Barbara Mikulski (D-MD), Jay Rockefeller (D-WV), Joe Manchin (D-WV). Majority Leader Reid also voted “no,” in a procedural move to permit him to try once again and “reconsider” cloture after the Senate returns in mid-April. In the meantime, Senators Joe Lieberman (I-CT), Tom Carper (D-DE), Susan Collins (R-ME) and Scott Brown (R-MA), the quartet championing S. 1789, will spend time over the Congressional recess attempting to work further revisions to the bill that win the necessary votes of their colleagues.
A Postal Health Plan: Silver Bullet or Wooden Nickel?
Meanwhile, the Postal Service continues to push for cost-savings in a far different way — through the creation of a health insurance plan for its employees and retirees outside of the Federal Employees Health Benefits Program (FEHBP). The Postal Service contends that such a move would save as much as $7 billion a year and create higher-value, less expensive health care benefits. Creating its own health plan, the Postal Service says, would eliminate the need for it to pay $5.5 billion a year in retiree health pre-funding payments, as well as return $42 billion it already has paid into the Retiree Health Benefit Fund, and additional deposits in FEHBP reserves.
Is a Postal Service-managed health care plan the silver bullet that will solve the Postal Service’s financial woes? Or is it a wooden nickel that will result in greater problems and higher costs for its employees and retirees? A Congressional hearing last week provided a mixed answer to that question.
Postmaster General Pat Donahoe, testifying before the House postal oversight subcommittee last Wednesday, contended that the Federal Employee Health Benefits Program, despite all the accolades it receives for being a model of health care delivery, does not provide enough flexibility to the Postal Service to leverage its size. With a half-million employees and another half-million retirees and dependents, the PMG believes the Postal Service could negotiate a better deal with an insurance carrier in the competitive health insurance market. And he pointed to billions of dollars that the Service is losing by not ensuring that Medicare-eligible retirees more fully participate in the receipt of Medicare benefits. The Postal Service also says that it would receive millions of dollars in Medicare prescription drug subsidies, ones already provided to private employers, if it could leave FEHBP and operate its own health plan.
Each of these arguments spawns counter-arguments. Walton Francis, a health insurance expert, testified to the subcommittee last week that the FEHBP is the single most successful health insurance program operated by the federal government, providing wide choice to employees and retirees. The Postal Service’s departure from the FEHBP, Francis said, would destroy the widely-used health plans currently provided by the postal employee unions. And the Postal Service itself would be hurt by the loss of over a half-billion dollars in savings in its employer premium payments. Why? Frances points out that younger, healthier non-postal employee participants at other agencies actually subsidize the Postal Service’s health care costs. If the Postal Service left FEHBP, he warned, it would lose these savings and have to make up for them by reducing benefits or increasing premiums in any plan it provides to its employees and retirees.
Undoubtedly one of the biggest areas of savings under the Postal Service proposal would come through better integration of Medicare coverage for Medicare-eligible retirees. This would involve requiring all Medicare-eligible retirees and dependents to fully utilize the Medicare benefits available to them, rather than using their FEHBP plan as the primary carrier. But this would also boost total Medicare costs, and the Federal government’s tab for them. That prompted committee chairman Rep. Darrell Issa (R-CA) at the hearing last week to tell Postmaster General Patrick Donahoe, “Let’s have no illusions, you’re just cost shifting.” “There’s no cost savings to the American people.” The money will be paid out of one hand in order to save it in another hand.”
Will the Postal Service health care proposal go anywhere? It’s possible that some version of it could find its way into the contracts currently being negotiated between the Postal Service and three of its employee unions. And some smaller version of it could find its way into a comprehensive postal reform package, if the Congress reaches that point. But the odds are small that the Postal Service will win Congressional approval to permit the Postal Service to leave FEHBP and administer its own private sector-like plan for its employees and retirees.
House-Passed Budget Measure Is Further Bad News for Feds
The House of Representatives on Thursday passed a budget resolution that extends the federal pay freeze, downsizes the government workforce and increases the amount federal employees contribute to their pensions. That would mean Federal Employees Retirement System employees, who now pay 0.8 percent of their paychecks toward their retirement, would instead contribute about 5.8 percent.
In a 228 to 191 vote that split along party lines, the House approved the Republican fiscal 2013 budget plan offered by House Budget Committee Chairman Paul Ryan (R-WI). The budget resolution is a non-binding document, but sets in motion further House efforts to legislate its aims.
The House-approved budget resolution calls for continuing the freeze on federal salary rates through 2015; cutting federal employment by 10 percent by hiring one replacement for every three employees who leave; and requiring employees to pay as much into the retirement fund as the government pays. That provision would require an increase on the employee side of as much as 6 percent of salary. The budget plan also raises the prospect of other cuts, including ending a retirement supplement for most employees under the Federal Employees Retirement System who retire before age 62. The provisions would result in about $368 billion in cuts to the federal workforce during the next decade. In addition, the Republican measure would relieve the Defense Department from significant budget cuts resulting from sequestration, which takes effect starting in 2013.
The Federal-Postal Coalition, which includes NAPS and other groups representing the interests of federal and postal employees, sent House lawmakers a letter earlier this week urging them to oppose Ryan’s proposal.
The measure likely will fail in the Democratic-controlled Senate, but proposals to reduce federal pay and benefits will remain alive for the foreseeable future.
Meanwhile, to extend certain transportation programs for three months, Congress has set aside several employee-related provisions that the Senate had attached to its version of a more comprehensive bill. These provisions will remain on the table as a more permanent transportation bill gets decided upon. One provision would allow federal workers, including postal supervisors, to phase into retirement by drawing a partial annuity while working part time and receiving a prorated salary. The other would boost, retroactive to January, the monthly tax free minimum amount that the federal government can reimburse employees for commuting via public transit. The amount would return to $240 per month.