On Senate Floor, Portman Refutes Claims Postal Service Reform Act Impacts Medicare Solvency

WASHINGTON, DC – Today on the Senate floor, U.S. Senator Rob Portman (R-OH), Ranking Member of the Senate Homeland Security and Governmental Affairs Committee, delivered remarks refuting claims from Senate colleagues who oppose the bipartisan Postal Service Reform Act because they believe it will impact the solvency of the Hospital Insurance Trust Fund, or Medicare Part A. Portman directly quoted the nonpartisan Congressional Budget Office’s (CBO) analysis of the legislation which demonstrates that not only will Medicare Part A not be affected at all, but CBO also establishes the legislation will have no impact on Medicare Part B or Part D premiums. In fact, the Postal Service Reform Act will set the United States Postal Service on a more sustainable financial footing and support the goal of providing long-term reliable service across the country. The bill strengthens transparency and accountability for Postal Service performance, eliminates unnecessary financial burdens, and helps ensure the Postal Service can better serve the American people. 

A transcript of his remarks can be found below and a video can be found here.

“Today on the floor of the Senate, we are also talking about Postal Service reform. This is about saving the Post Office. It’s in big trouble. In my view, if we don’t put some reforms in place in the Post Office and do it quickly, we are going to have a situation where in the next few years the Post Office will become insolvent. And what will we do then? A huge taxpayer bailout. We have an alternative, which is to put in place reforms now, both through congressional action, passing the law that I’ll talk about in a second, but also through internal reforms at the Post Office itself, with the current Postmaster General committed to those reforms, I am confident that those can move as well. The combination of those two things means saving the Post Office. And it’s really important. 

“Think of the veterans that you represent if you’re a member here in the Senate, who get their medications, their prescriptions from the mail. I’m sure you’ve heard from them because I have. They don’t like it when their drugs are a day late, much less two or three days late or a week late because of the Post Office not being able to perform. How about the people who get their Social Security checks in the mail? I’ve heard from them, too, and I’m sure you have. They want a strong Post Office. They know that that universal service obligation, meaning the Post Office goes to every mailbox, is critical to them and their ability to get those life-saving Social Security checks. 

“What about the voters who vote absentee in Ohio? We have no-fault absentee, and it works very well. It’s a system that is fair. It’s a system that is secure, but it’s a system that relies on the Post Office doing its job right to make sure those ballots are delivered properly, both to the voter, but also back to the boards of elections. So the Post Office is critical, and again, no one else is going to pick up this function. That last mile is not going to be done by somebody else. The Post Office is absolutely critical to save because it is absolutely critical to the American people. 

“So what does our legislation do? Basically, it just does a few things. First, it eliminates a burdensome pre-funding requirement for retiree health benefits that the Post Office has to make that nobody else does. Congress mandated this back in 2006. I’m not quite sure why. They mandated it for all current employees, regardless of age. This has crippled the Post Office financially. No other federal agency or Department does that, by the way. The federal government does not require pre-funding of retiree health benefits, nor does the private sector, frankly. In the private sector, it’s basically Medicare. So we take away that onerous burden, which, again, is crippling the Post Office financially. 

“Second, we require the Post Office employees who are retiring, who have been paying into Medicare their entire career to actually enroll in Medicare Part B and Part D. So hospital visits or prescription drugs. That saves the Post Office money, but it also saves the taxpayer a bunch of money because right now those employees, about 25 percent of them, postal employees, do not go into Medicare and they stay in the Federal Employees Health Benefits Plan, soon to be the Postal Service Health Benefits Plan, which is a more generous plan that will still be there to back up. But these employees going into Medicare helps to save the Post Office. 

“Third, we require the Postal Service to maintain its current standard of six-day delivery. Now, this is very important because a lot of members in this caucus on my side, Republicans, feel very strongly about this, but so do members on the Democratic side, particularly if they represent rural areas because the six-day delivery, as I’ve said, is so important for things like those Social Security checks, the rent check, paying your utility bills, ensuring that you have the ability to get your prescriptions over the mail. 

“So that’s in this legislation, but also doing it through an integrated delivery network of mail and packages, think about first-class mail and other mail and packages to have those integrated services far more efficient for the Post Office, obviously. That’s what they’re doing now. So this legislation simply says the status quo should continue there. Otherwise, it would be terribly inefficient, very inefficient for us to have a separate system for packages and a separate system for mail. 

“The combination of all these things, by the way, means that the Congressional Budget Office estimates that this legislation will save the taxpayer $1.5 billion. So it doesn’t cost anything. This is not an appropriation, but over ten years, it does save $1.5 billion. In response to legitimate concerns that I have heard from the shipping and the banking community, let me also note what this bill does not do. One, it does not appropriate any new funds to the U.S. Postal Service, period. Number two, it does not change the accounting or costing structure for packages and letters, so it does not disadvantage private sector carriers. That’s very important. Three, it does not allow the Postal Service to enter into new commercial services like postal banking, period. 

“So those are important things that have sometimes been misrepresented, as I’ve heard people talk about this legislation. Finally, and very importantly, despite the claims of some of the opponents of this legislation, this bill does not impact the solvency of the Medicare Part A Trust Fund, period. And for people who keep saying that, you’re wrong and you know it because CBO has now made that very clear. I’ve made it clear on the floor. So have others. If that’s the reason you’re not supportive of this legislation, you ought to look twice at it because it does not affect the solvency. 

“And this bill also, we have found out from CBO, does not impact or increase the Part B or the Part D premiums. Again, some people have said that, it’s just not true. So we know this because one of my colleagues asked CBO these questions in a letter. Some of us were already saying this because as an example, with regard to Part A, people have been paying in their whole lives, but they’re also already eligible for Part A, so they’re not going to add to Part A. But this colleague of mine wanted to be sure and get the answer from CBO. So he asked CBO this question, ‘What is the effect of the legislation on the Medicare Hospital Insurance Trust Fund? 

“Here was the answer from CBO, and I quote:

‘Most people aged 65 or older are entitled to benefits under Medicare Part A, hospital insurance, if they have worked and paid Medicare taxes for an adequate number of quarters. Nearly all Medicare eligible USPS, that’s Postal Service annuitants, are already covered because entitlement to Part A is related primarily to a person’s age and employment history. CBO estimates that the legislation’s Medicare requirement would not increase the number of people receiving benefits under Part A. Therefore, the agency estimates that HR 3076 would not result in additional spending from the Hospital Insurance Trust Fund. Period.’ 

“No impact. My colleague also asked the CBO, ‘So what is the effect on Medicare premiums in Part B and Part D?’ The trust funds there, as you know, are funded by people paying premiums. But the question is, are the premiums going to go up in Part B and Part D? And the question really is, what is the effect on everybody. Here’s CBO’s reply:

‘Our preliminary analysis suggests that the legislation is unlikely to have an effect. CBO does not expect that Part D drug coverage premiums would change under HR 3076. Monthly premiums for Part B are set by the Secretary of Health and Human Services to finance one-quarter of the expected annual monthly Part B spending for all enrollees aged 65 or over, rounded to the nearest multiple of $0.10. To cause a change under HR 3076, the group of new enrollees would need to be large enough and their health care costs would need to be sufficiently different from the current averages to affect the average. CBO projects that under current law, Part B enrollment will increase from 64 million people in 2025, the year that HR 3076 would begin requiring certain USPS annuitants to enroll in Part B to 73 million people by 2031. CBO estimates that under the legislation, enrollment in Part B would increase by between 13,000 and 40,000 people over that period of time, or less than 0.1 percent of the program’s total enrollment. It is unlikely that an increase of that magnitude would affect the monthly Part B premiums.’ 

“Well, in other words, what they’re saying is it won’t affect the premiums because it’s a drop in the bucket. We’re talking about 60 or 70 million people, and we’re talking about 13,000 to 40,000 people coming into Part B. By the way, again, these people paid their HI taxes all through their careers. CBO then continued relative to Part D. This is the drug benefit. And I quote:

‘HR 3076 would require PSHB (Postal Health Benefit Plan) to deliver prescription drug benefits using an employer group waiver plan under Medicare Part D. Part D premiums are based on the national average monthly bid amount as calculated by the Centers for Medicare and Medicaid Services using information from applicable plan bids. Because employer group waiver plans are excluded from that calculation, CBO estimates that the legislation’s requirements would not affect Part D premiums.’ 

“So let me again put it clearly. The bill does not impact the insolvency of the Hospital Insurance Trust Fund, the Part A Trust Fund, which is the trust fund we all talk about here, period. And the bill does not increase Medicare Part B and Part D premiums. By the way, because of this and because it saves the Post Office, this legislation passed the House with strong bipartisan support. Just a couple of weeks ago it passed by a vote of 342 to 92. Not much gets passed in the House with those kinds of big partisan numbers these days, but saving the Post Office is pretty popular, particularly when it’s done the way this is done. This was worked out between members of both sides of the aisle, between both sides of the Capitol. We did it carefully. We did it in a way that, yes, we’ll save the Post Office along with the other reforms internally we talked about, but in a way that is actually a money saver for the taxpayer. It’s also pretty popular with constituents. 

“It’s popular with postal workers because they want to have a Post Office that continues to survive. It’s supported by the Citizens Against Government Waste, which wrote a letter acknowledging the importance of this bill for ensuring the solvency of the Post Office. I’d like to enter that letter into the record by unanimous consent, Mr. President. So I encourage my colleagues to join us in support of this legislation. 

“Let’s put the Postal Service in a position to succeed and let’s provide those essential services the small businesses, veterans, the elderly, rural constituents rely on so much. The prescription drugs we talked about, the Social Security check, the rent checks, the utility checks, the balance. I appreciate working with my colleague, Senator Gary Peters, on this over time to try to find a consensus, to try to find a way forward that was bipartisan, bicameral where we could actually do something, after years and years of talking about what bad shape the Post Office is in financially to do something, to right the ship, to ensure it’ll be there for the future. Let’s pass this bill and let’s do ensure that the Post Office is healthy for all the folks we represent going forward. I yield back my time.”