If robbing Medicare to bail out USPS retiree health benefits, the question is, who will bail out the trillions of unfunded liabilities facing Medicare?
By Richard Manning
A Medicare funding crisis is due to hit in four years, yet the Senate is about to consider raiding the Medicare Trust Fund to benefit powerful Democrat union allies.
Speaker Nancy Pelosi has already pushedlegislation through the House, HR 3076,which would burden the Medicare system with the retiree health care costs of postal workers to the tune of $5.6 billion over the next ten years.
According to an August, 2020 report by the Government Accountability Office, the “United States Postal Service’s (USPS) current business model is not financially stable” with an almost $78 billion deficit in the past 13 years. And the House Postal Reform bill fails to make the kind of systemic changes needed to right the sinking ship. Instead, the bill is little more than a dangerous Postal Band-Aid.
But for our nation’s senior health care system, this cynical attempt to flood it with extra liabilities puts a dagger in the heart of Medicare solvency with the inevitable outcome being higher payroll taxes and cuts in Medicare benefits for retirees.
Remember, payroll taxes pay for Medicare as it performs like a quasi-insurance plan paid into while working to provide benefits when most are retired. But guess who hasn’t been paying into Medicare – postal workers. Postal workers have a special retirement health system negotiated by their union which is headed toward bankruptcy. But if HR 3076 becomes law, every postal worker will be required to join Medicare when they turn 65, transferring their health care costs from the USPS to Medicare.
This would be outrageous even if Congress were not aware that Medicare is teetering on the brink of financial disaster. Just six months ago, the Centers for Medicare and Medicaid Services (CMS) reported that Medicare will be depleted in 2026 writing, “… current projections indicate that Medicare still faces a substantial financial shortfall that will need to be addressed with further legislation.
This massive postal expense dump onto the Medicare program will have the dual effect of accelerating the senior health care program’s bankruptcy, and increasing the costs and cuts associated with any rescue plan.
So, who besides the United States Postal Service and their union would support legislation that does little to solve the basic problems facing the post office, while exacerbating those facing CMS?
Amazon, the largest privately held company in the world, thinks this is just a peachy idea.
Why? It comes down to package delivery cost shifting as well. The cost of package delivery in more densely populations is low as a delivery driver can maximize the number of deliveries per hour. However in more rural areas, the costs of delivery are high and unprofitable.
The USPS is required under law to deliver everywhere in America, no matter how remote. Amazon does not want to deliver packages in remote areas and will often use the post office to do these ‘last mile’ expensive deliveries.
By supporting burdening Medicare with costs that are currently borne by the Post Office, Amazon hopes to keep real postal reforms at bay that might include making changes to five or six day a week rural deliveries which would hurt their profit/loss statements.
Real Postal reform is needed, but like many things Congress does, HR 3076fails to meet any objective standard of reform. Instead, it is little more than a cynical attempt to cater to the postal carriers union while benefitting the world’s largest company whose owner also happens to have the Washington Post in his portfolio.
Quite simply, fast forwarding a Medicare crisis without even getting the benefit of averting a postal system collapse is bad policy.
As for the politics, raise your hand if you think the threat of Medicare cuts won’t be part of the 2024 elections, when the accelerated crisis will dominate Congress in 2025? Does anyone in their right mind think putting Medicare bankruptcy into the middle or the presidential debate will result in a rational discussion of how to honestly reform the system, or will it devolve into dark ads threatening seniors with the prospects of their losing health care coverage?
If robbing Medicare to bail out USPS retiree health benefits, the question is, who will bail out the trillions of unfunded liabilities facing Medicare? All I can say is hold onto your wallets because there is only one trough of money big enough to solve the Medicare problem without major changes to the program, and it is currently in your bank and private retirement account.
Richard Manning is President of Americans for Limited Government.
