Postal service

DeFazio’s USPS Fairness Act passes, saving Postal Service $5 billion a year – Oregon Capital Chronicle

Since 2006, the US Postal Service has been required to set aside $5 billion a year to pay for health benefits for all employees who are scheduled to retire within the next 75 years.

On Tuesday, the requirement ended with the passage of the USPS Fairness Act, which was approved by the US Senate and House of Representatives. The law will allow USPS employees to enroll in Medicare upon retirement, saving the Postal Service more than $50 billion over the next 10 years.

The agency and employees were required to contribute to Medicare and the federal Employee Health Benefits program simultaneously, but employees were only allowed to use the latter upon retirement.

New employees will no longer have their health care benefits paid by the agency when they retire. USPS will continue to pay retirement health care benefits for employees they currently have and current retirees.

The Postal Service was the only agency mandated to pre-fund retirement health benefits.

The USPS Fairness Act was drafted and championed by U.S. Representative Peter DeFazio, D-Oregon, who had lobbied since 2013 for the removal of the pre-funding requirement to stabilize Postal Service finances. He is currently about $11 billion in debt, according to the Congressional Research Service.

Representative Peter DeFazio speaks at the Eugene Depot on May 24. (Oregon Department of Transportation)

According to a statement from DeFazio’s office, the prefund mandate accounted for all of the Postal Service’s losses from 2013 through 2018.

DeFazio drafted the USPS Fairness Act to eliminate the Bush administration’s 2006 law that required the Postal Service to pre-fund health care benefits in retirement.

In a speech to the House on Feb. 8, DeFazio called the law “an attempt to kill the Postal Service.”

DeFazio said the agency must remain public: privatization would drive up prices and impact rural communities.

The USPS “will go where the private sector doesn’t want to go,” DeFazio said. “I have people who live in the more remote parts of my district, and they make their living on Ebay and sell things, what if the postal service doesn’t pick up their packages and deliver their packages with this rate of a box, they couldn’t make a living.

The USPS Fairness Act is part of a larger legislative package called the Postal Service Reform Act that was passed on Tuesday. This is a bipartisan effort to turn the agency’s finances around and put it on a 10-year path to financial solvency.

The Postal Service Reform Act will require the USPS to deliver six days a week, offer postage discounts to rural newspapers, and allow the agency to raise additional funds by allowing local, state, and tribal governments to use post offices for certain services such as registering for a hunt or fishing license, or applying for Supplemental Nutrition Assistance Program or SNAP benefits.