USPS Proposed Health Plan Could Improve Financial Condition

by Sabrina I. Pacifici on August 20, 2013

U.S. Postal Service: Proposed Health Plan Could Improve Financial Condition, but Impact on Medicare and Other Issues Should Be Weighed before Approval, GAO-13-658, Jul 18, 2013
“The U.S. Postal Service (USPS) would likely realize large financial gains from its proposed health care plan, primarily by increasing retirees’ use of Medicare. Specifically, USPS estimates that its plan would reduce its retiree health benefit liability by $54.6 billion, thereby eliminating its unfunded retiree health benefit liability. The plan would also reduce USPS’s required total annual health care payments by an estimated $7.8 billion in the first year of implementation and by $33.2 billion over the first 5 years of implementation. USPS also projects that relative to the total annual health care payments it would expect to make (reflecting its stated inability to make prefunding payments to fund retiree health benefits), its new plan would reduce its payments by $2.1 billion in the first year of implementation and $12.4 billion over 5 years. USPS also projects that its plan would increase the more than $550 billion that the federal government spends annually for Medicare by $1.0 billion in the first year and an average of about $1.3 billion annually in the first 5 years of its health plan—about 0.2 percent of Medicare’s annual costs. GAO has previously reported that Medicare is on a fiscally unsustainable path over the long term. Additional costs resulting from USPS’s proposed plan would also have to be weighed alongside the fiscal pressure already faced by Medicare, but these costs have not been evaluated by the Office of Management and Budget (OMB) or the Centers for Medicare and Medicaid Services (CMS).”

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