USPS proposal would oust FEHBP for single health plan

Wednesday - 10/5/2011, 9:26pm EDT

Your Turn with Mike Causey

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By Jolie Lee
Federal News Radio

In August, the cash-strapped Postal Service proposed a budget plan that included pulling its employees out of the Federal Employee Health Benefits Program and creating its own health system.

Critics to this idea have said the Office of Personnel Management, which manages FEHBP, offers the best options for feds due to the economy of scale, with 8 million participants in the program.

But Tony Vegliante, the Postal Service's chief human resources officer and executive vice president, told Federal Times he thinks FEHBP has been "watered down" with too many options — more than 200 next year.

A USPS health plan would take a cue from the private sector by scaling back the number of different plans — such as offering a single plan with one providers and some options within that plan, said Steve Losey, a staff writer for Federal Times, in an interview with Your Turn with Mike Causey.

Currently, postal workers choose from about 25 health options, Losey said.

The Postal Service is also proposing eliminating the defined benefit pension for new employees, Losey said. Currently, employees' retirement benefits consist of the defined benefit pension, the Thrift Savings Plan and social security.

The USPS argument for eliminating this leg of the three-legged stool of retirement benefits is that it is a "dinosaur in the private sector," Losey said. The Postal Service is "going fast into bankruptcy. They're saying, 'we just can't afford this.'"

USPS lost $20 billion in the last five years, and it is on track to lose more than $6 billion this year. If the Postal Service were a private business, it would be facing the equivalent of Chapter 11 bankruptcy, according to a Government Accountability Office report.

The Postal Service health plan has not taken a foothold. The White House plan to rescue the Postal Service did not address the health plan at all, instead focusing on reducing mail delivery to five days. Other proposals in Congress address USPS' prepayment to its retirement system.

The Postal Service, however, is "dead serious" about creating and managing its own health plan, Losey said.

In his interview with the Federal Times, Vegliante said, "Wish upon a star is not a management strategy.You hope something's going to happen? No, you got to make things happen. This makes things happen."

In the first half of the show, Mike talked to Susan Johnson, president of the American Foreign Service Association. At the end of the show, Mike also spoke with Sean Reilly of the Federal Times about the continuing resolution.