How Congress’ postal overhaul will affect your mail — and California workers
Congress on Tuesday passed the biggest overhaul of the United States Postal Service since 2006 to help stabilize the financially-struggling agency.
The Postal Service Reform Act drops a mandate that the U.S. Postal Service prepay its retired employees’ health care benefits and requires future retirees to enroll in Medicare, the federal health insurance program for older people.
Lawmakers estimate that change will save the agency $50 billion over the next decade.
It requires that the U.S. Postal Service stick to a six-day delivery plan. And it allows the agency to partner with state, local and tribal governments to provide services that are not related to mail, including to offer hunting, fishing and drivers licenses.
The measure, which takes hold in January 2025, also requires the U.S. Postal Service to heighten transparency over its efficiency and practices with an online dashboard, a study on operational issues and stricter oversight.
It also aims to help local newspapers by reducing mailing fees.
The measure received overwhelming bipartisan support in the U.S. House of Representatives and Senate. President Joe Biden is expected to sign it. The U.S. Postal Service and postal service worker unions also back it.
“This legislation creates more transparency, includes reforms that will save billions of dollars over 10 years, and improves day-to-day operations,” Rep. Jim Costa, D-Fresno, said in a release following the House vote.
Changes in postal service retiree health care
The U.S. Postal Service reported more than $206 billion in unfunded liabilities and debt as of 2021. Much of that was due to its retirees’ health care costs.
The 2022 act would repeal a 2006 mandate that the U.S. Postal Service prepay its retired employees’ health care costs. The U.S. Postal Service has not made those health care payments since 2012.
With the act, the U.S. Postal Service would only pay current retirees’ actual health care costs that aren’t covered by Medicare.
About one of four retirees have not enrolled in Medicare even though they are eligible, according to the House Committee on Oversight and Reform whose members spearheaded the bill.
The agency has had 14 years of financial losses as fewer people use its services. Without intervention, U.S. Postal Service officials said the agency was on track to run out of funds for its operations by 2024.
The U.S. Postal Service relies on stamps and deliveries to fund itself. It does not get taxpayer money for operations, unlike other government agencies.
The Congressional Budget Office, which offers analyses on Congress’ proposed spending measures, projected that the act would save the government about $1 billion over the next 10 years, largely because the postal services’ former employees would boost Medicare’s prescription drug discounts. It said that the measure would increase total spending under Medicare by $5.5 billion this decade.
In response to questions by Republican Sen. Rick Scott of Florida, the director of the Congressional Budget Office said that the act would likely cost Medicare at least another $5 billion after 2031. Congressional Budget Office Director Phillip L. Swagel added that the increased number of Medicare enrollees would not affect premiums, the amount a person pays for periodically for coverage, since the addition is so small.
Postal Service’s own plan slows mail delivery
The U.S. Postal Service came under fire last year for loosening shipment timelines as part of its 10-year strategy to stay financially afloat. It projected that actions under the plan — slowing delivery times, reducing its hours and relying more on ground versus air shipments — would prevent $160 billion in losses over the next decade.
New regulations let some first-class mail be delivered in up to five days, depending on where it is coming from within the continental U.S., rather than the previous standard of three.
Most letters, packages and periodicals, like subscription magazines, would not be affected by the change, a spokesperson for the agency told The Sacramento Bee in September.
The plan led California’s attorney general and 19 others to file a complaint with the U.S. Postal Service’s overseer, claiming that the agency did not properly share changes for review before implementation.
Postmaster General Louis DeJoy said in a statement that the Postal Service Reform Act “will have the same operational and financial impacts as the self-help steps we are taking at the Postal Service to provide the American people with the delivery service they expect and deserve.”
This story was originally published March 8, 2022 at 12:00 AM with the headline "How Congress’ postal overhaul will affect your mail — and California workers."
