DeFazio’s USPS Fairness Act passes, saving the Postal Service $5 billion a year

Since 2006, the U.S. Postal Service has been required to put aside $5 billion a year to pay for the health benefits of all employees expected to retire for the next 75 years. 

On Tuesday, the requirement ended with the passage of the USPS Fairness Act, which was approved by the U.S. Senate and House of Representatives. The law will allow USPS employees to enroll in Medicare upon retirement, saving the Postal Service more than $50 billion over the next 10 years. 

The agency and employees had been required to pay into Medicare and the Federal Employees Health Benefits Program simultaneously, but employees were only allowed to use the latter upon retirement. 

New employees will no longer have their health care benefits paid by the agency when they retire. USPS will continue to pay for the retirement health care benefits of the employees they currently have and for current retirees.

The Postal Service was the only agency mandated to pre-fund retirement health benefits. 

The USPS Fairness Act was written and championed by U.S. Rep. Peter DeFazio, D-Oregon, who had pushed since 2013 to get the pre-funding requirement removed to stabilize the finances of the Postal Service. It is currently about $11 billion in debt, according to the Congressional Research Service. 

According to a statement from DeFazio’s office, the pre-funding mandate accounted for all of the Postal Service’s losses from 2013 to 2018.

DeFazio wrote the USPS Fairness Act to eliminate the 2006 Bush Administration law that required the Postal Service to pre-fund retirement health care benefits. 

In a speech on the House floor Feb. 8, DeFazio called that law an “attempt to kill off the postal service.”

DeFazio said the agency needs to remain public: Privatization would cause prices to increase and impact rural communities.

USPS “will go where the private sector does not go does not want to go,” DeFazio said. “I have people who live in the most remote parts of my district, and they make a living on Ebay and selling things, and if the Postal Service wouldn’t pick up their packages and wouldn’t deliver their packages with that one box rate, they couldn’t make a living.”

The USPS Fairness Act is part of a larger legislative package called the Postal Service Reform Act that passed Tuesday. It is a bi-partisan effort to right the agency’s finances and get it on a 10-year track to financial solvency. 

The Postal Service Reform Act will require USPS to deliver six days a week, provide postage discounts to rural newspapers and allow the agency to raise additional money by allowing local, state and tribal governments to use post offices for some services such as registering for a hunting or fishing license, or applying for Supplemental Nutrition Assistance Program, or SNAP benefits.