Good News For H.R. 22 Supporters?
Well, maybe there is financial relief on the way for the U.S. Postal Service?
The U.S. Postal Service Office of Inspector General (OIG), through its actuarial consultant, Hay Group, revealed in a report that the assumption annual health care cost inflation rate will average 7% annually for all future years is “unreasonably high. Therefore based on Office of Personnel Management’s methodology, the Postal Service’s future retiree health care liabilities will be overestimated.”
That should be good news for the USPS and supporters of H.R. 22 — a House bill that would redirect a portion of the Postal Service’s prior payments to the Postal Service Retiree Health Benefits Trust Fund to pay its share of contributions for current retiree health benefits through 2016. If enacted, H.R. 22 would allow the USPS to pay for health care benefits for current retirees out of its Retiree Health Benefit Fund – which currently hovers around $32 billion — instead of its operating budget.
If the USPS continues the payment schedule required by the Postal Accountability and Enhancement Act of 2006 (the Act), the report says, “our calculations indicate that the Postal Service could overfund its retiree health care liability by $5.6 billion by the end of fiscal year 2016. The Postal Service could pay on average $3.3 billion less each year for fiscal years 2009 to 2016 to prefund its retiree health benefits and still achieve the same level of funding anticipated under OPM’s assumptions. The net present value of the interest savings from the reduced payments is $4.88 billion.
In conclusion, the report recommends that the Postal Service chief financial officer and executive vice president pursue legislative relief from the mandated schedule of payments into the Postal Service Retiree Health Benefit Fund.
