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USPS wants single health plan for employees, retirees

Sep. 28, 2011 - 06:00AM   |  
By STEPHEN LOSEY   |   Comments
The U.S. Postal Service recently proposed pulling out of federal health and pension plans and starting its own single plan for employees.
The U.S. Postal Service recently proposed pulling out of federal health and pension plans and starting its own single plan for employees. (Getty Images)

The U.S. Postal Service wants to create a new, single health care plan for its employees.

Tony Vegliante, the Postal Service's chief human resources officer and executive vice president, said in an interview Wednesday that concentrating roughly a million postal employees and retirees in a single insurance provider would yield true economies of scale and hold down health care costs for the financially flailing agency.

Postal employees and retirees now get their health insurance through the Federal Employees Health Benefits Program (FEHBP), which offers hundreds of national, regional and local health plans to choose from. The Postal Service recently proposed pulling out of federal health and pension plans and starting its own as a way to cut costs.

Vegliante said FEHBP has "watered down" its negotiating position by dividing 8 million federal and postal employees and retirees among more than 200 plans.

"I don't see any benefit we'd be deprived of," Vegliante told Federal Times. "In fact, I see the opposite effect. There's 207 plans in FEHB there's no economy of scale there. I don't know where the leverage is."

Vegliante said large private-sector companies such as IBM, Wal-Mart and GE have found savings by concentrating their health care programs into single plans.

The agency said setting up its own health care plan would allow the agency to take advantage of private-sector best practices that FEHBP is not applying.

But critics are skeptical of the Postal Service's plans. Office of Personnel Management Director John Berry told Congress Sept. 6 it would require more analysis to decide if the postal plan would save money. And the Obama administration did not include the health care proposal in the postal rescue plan it proposed last week.

Vegliante said the plan would not drive up enrollees' premium expenses. It would drive down the Postal Service's expenses, he said, and the Postal Service would put those savings toward paying for retirees' health benefits.

The Postal Service is also seriously considering offering lower, prorated health care benefits to retired part-time workers as a way to cut its health care costs. Vegliante said the Postal Service now provides the same amount of health care coverage for its roughly 52,000 part-time employees as it does for full-time employees. That is a cost the Postal Service can no longer afford, he said.

"We provide the same coverage, retiree health care, if you work five hours a week or if you work 40 hours a week," Vegliante said. "Who does that? Private sector doesn't do that. You would get a prorated [benefit]. It's an expensive proposition."

Vegliante said the Postal Service has suggested that and other changes to the Office of Personnel Management, but has gotten no response.

The Postal Service is also thinking about adding a self-plus-one option for childless couples or single parents. FEHBP now only provides a self-only option or a family option, and it's often less expensive for married couples without children to each keep their own self-only plans than to move to a family plan.

OPM has its own health care and insurance division responsible for negotiating rates with insurance providers, but the Postal Service has no dedicated health care office. Vegliante said the Postal Service's contracting office with assistance from outside human resources consultants such as Aon and the Hay Group would be in charge of striking deals with the insurance provider.

Vegliante said the Postal Service's bills are piling up fast, and something must be done soon.

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

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