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Life Health > Health Insurance > Health Insurance

CBO: Axing Saturday mail delivery may save more than postal benefits cuts

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Eliminating regular Saturday mail delivery and delivering more mail to curbside receptacles that serve multiple addresses would save a lot more money than cutting back on benefits for employees and retirees. 

Analysts at the Congressional Budget Office (CBO) present projections supporting that conclusion in a new look at H.R. 2748, the Postal Reform Act bill.

The authors of the bill hope to shore up the U.S. Postal Service by:
  • Letting the service cut mail delivery to five days per week, from six.
  • Letting the service deliver more mail to multi-customer receptacles.
  • Eliminating appropriations for free and reduced-rate mail.
  • Reducing the contributions for active employees’ health and life premiums to 70 percent for health, from 78.5 percent today, and to 33 percent for life, from 100 percent today.
  • Changing the retiree health benefits contribution formula to reflect postal workers’ relatively low salary increases and relatively post-retirement death rates.
  • Cutting retiree health benefits pre-funding requirements in 2015 and 2016.

Government accounting rules would put the effects of some of the changes on the federal budget and more off-budgets, the analysts write.

See also: Postal Service to cut Saturday mail to trim costs

See also: Postal Service might send retirees to Medicare

In the past, postal service officials have argued that retiree health benefits pre-funding requirements are a huge burden, but the CBO analysts say service cuts could save considerably more than the proposed benefits cuts.

The analysts say cutting Saturday mail delivery and delivering more mail to multi-customer receptacles would save about $20 billion from 2015 through 2014.

The proposed cuts in benefits for active employees might save $1.9 billion over that period, and the retiree benefits changes might save about $3.3 billion, the analysts estimate.

Congress passed a law requiring the postal service to prefund retiree health benefits. No other U.S. employers face such requirements. The Government Accounting Standards Board (GASB) is still developing standards that local and state agencies could use to report their own exposure to retiree health benefits, or “other post-employment benefits” (OPEB).


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