Pricey Little Sideshow in 3 Acts

Pricey Little Sideshow in 3 Acts


Last week, amid Russia’s ruthless invasion of Ukraine and the rapid passage of a massive 2,741-page, $1.5 trillion spending bill, it’s not surprising that enactment of a postal reform bill (H.R. 3076) got little attention.

Touted as a long-awaited “bipartisan” measure, the postal legislation, 15 years in gestation, is anything but noncontroversial.

Fast-tracked through Congress, the bill shifts tens of billions of dollars in liabilities from what is supposed to be the “self-financing” U.S. Postal Service to federal taxpayers.

If the Postal Service had a company name like “JP Morgan” one could imagine how such a bailout would have drawn immediate opposition from across the political spectrum.   

How did such a thing happen? Here’s how this little drama unfolded:

Act 1, Scene 1:  House Fast-Tracks Passage  

On Feb. 8, with the support of the Biden administration and the powerful postal unions, the House of Representatives passed the Postal Reform Act by a vote of 342 to 92. One might have expected that House Republicans would have at least had second thoughts, but instead, 120 House Republicans joined the Democratic majority.  

Act 2, Scene 1: Sen. Scott’s Objection

The House bill appeared to be on a smooth glide path to Senate passage. But Sen. Rick Scott, R-Fla., raised fiscal concerns, requested the Senate take a closer look at the bill, and said he would offer an amendment.

So, on Feb. 14, when the bill was brought to the Senate floor for consideration under the Senate’s unanimous consent rule, Scott objected.

He did so for good reason: The Postal Service had accumulated tens of billions of dollars in unfunded obligations for postal retiree health costs. (In 2020, the Government Accountability Office estimated those costs at $75 billion.)

With the legislative reorganization of Postal Service health care financing, those very real costs do not simply disappear. Instead, the House bill  shifts those costs onto the taxpayer by dumping them onto the financially troubled Medicare program.

In explaining his objection, Scott told his colleagues that he simply wanted the Congressional Budget Office to examine the long-term impact of such a major cost shift on the Medicare program and its beneficiaries. And, as Sen. Ron Johnson, R-Wis., noted, there was no Senate hearing on this measure, nor any Senate debate at all.

Scott’s objection was reasonable. While the U.S. Postal Service has been bleeding billions of dollars for years, Medicare, the huge federal health program serving senior citizens, is also in serious financial trouble. 

In four short years, Medicare’s huge hospital program faces insolvency, meaning that, unless Congress acts, Medicare patients face serious benefit payment cuts.

Medicare spending is accelerating at warp speed, and it, too, is generating an enormous taxpayer debt in the form of long-term unfunded obligations.

Medicare’s trustees estimate the program’s long-term unfunded obligations at $48.3 trillion, the dollar amount of benefits promised, but not financed. That is equivalent to $150,000 per American.

More to Scott’s point, with Medicare spending accelerating, piling on billions of dollars of additional unfunded obligations is pouring gasoline on Medicare’s fiscal fires.

The House postal bill also imposes a costly mandate on postal retirees. Because the bill forces future postal retirees out of the superior Federal Employees Health Benefits Program (FEHBP) into traditional Medicare for primary coverage, they would now have to buy supplemental coverage, and pay two premiums rather than one, to fill crucial benefit gaps, including catastrophic coverage.

This supplemental coverage fuels excess demand and drives up Medicare beneficiary and taxpayer costs even more.

Act 2, Scene 2: CBO Report

While the CBO did not account for these unfunded obligations in its estimate, or the House bill’s budgetary effects for the next 20 years, as Scott requested, the senator learned from the CBO that the bill would add at least $5 billion to the nation’s deficits.

The CBO also dropped a nasty bomblet. It said that, even with enactment of the House bill, it was still “unclear” how the Postal Service would pay for its “ongoing obligations” for health care, including health care for its retirees, after 2031.

Act 2, Scene 3: Scott’s Amendment

Congressional bill sponsors simply ignored or downplayed the Medicare cost issue.

So, Scott announced a simple amendment: In any transition of postal retirees to full Medicare coverage, the Postal Service should be required to reimburse the Medicare program for any additional costs.

If the Medicare cost issue was not a problem, then logically there could be no objection.   

The Postal Service, as noted, is supposed to be a self–financing agency. It is, of course, failing as a self-financing agency, running up billions of dollars in annual deficits, and accumulating, according to the GAO, a breathtaking $188 billion (about $580 per person in the U.S.) in debt.

That debt includes, of course, its huge unfunded health and pension obligations. In short, the agency is a financial mess.

In offering his amendment, Scott asked his Senate colleagues in effect whether America’s taxpayers should be targeted for such a massive cost-shift—a cost-shift that is justified only by the agency’s notorious financial failures.   

Act 3, Scene 1: Senate Floor Votes

On March 8, the Senate took up the postal reform bill.

Under the prevailing Senate rule, Scott asked for unanimous consent for the Senate to consider and vote on his amendment to require the Postal Service to reimburse the Medicare program for the additional Medicare costs.

Johnson, along with Sens. James Lankford, R-Okla.; Mike Braun, R-Ind.;  and Charles Grassley, R-Iowa, cosponsored the amendment. Senate Democrats then objected, and blocked consideration of, and a vote on, the Scott amendment.

As noted, the CBO confirmed the bill would add to the deficit. So, Scott then made a “point of order” against the bill because it violated the Senate’s budget rules. 

In response, Sen. Bernie Sanders, I-Vt.,  a socialist, made a motion that the Senate waive the budget rules to advance the House bill. Remarkably, Sanders’ motion passed by a vote of 68 to 30, garnering support from a surprising number of Republican senators.

After blocking debate on Scott’s amendment and waiving the budget rules, the Senate passed the House postal bill by a lopsided 79-19 vote.

Alas, conscientious lawmakers are often in the minority.    

Curtains

Though the postal reform debate is over, at least for now, Scott’s performance was a profile in statesmanship.

The senator knows that the bigger and broader Medicare debate is inevitable, and that Medicare’s future financial stability is essential to fulfilling its promise to deliver high-quality care to a large and growing cohort of senior citizens.

Medicare reform will soon be among America’s greatest policy challenges.

Scott also reminded his colleagues that throwing billions of taxpayer dollars at a problem is not a solution.

Bailouts are no substitute for real postal reform, as Heritage analysts have long insisted, and taxpayers’ pockets are not inexhaustible. 

Maybe next time, they will listen.

Have an opinion about this article? To sound off, please email [email protected] and we’ll consider publishing your edited remarks in our regular “We Hear You” feature. Remember to include the url or headline of the article plus your name and town and/or state.




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