USPS In Crisis: Can The Post Office Cut Its Retiree Healthcare Costs?

At the conclusion to my prior article, I observed that all the discussion about whether and how the Post Office should be pre-funding its retiree medical costs, is begging the question, and that we need to be asking, “why are those costs so high in the first place?”

And, again, one of the reasons why the USPS was required to fund its retiree healthcare in advance was that it can’t eliminate the liability absent a literal Act of Congress. But another issue is that its liabilities in this respect are substantially higher than in the private sector.

Both of UPS’s package-delivery competitors have significant pension liabilities, and all three companies have pension plans that are funded at nearly the same level.

Are their pension liabilities at the “right” level for each of these plans, relative to their size? There’s no simple answer. But the size of the retiree healthcare liabilities at the USPS is clearly of a much greater magnitude, relative to its pension liabilities, than for its competitors. The lack of retiree healthcare fund at UPS and FedEx barely makes a dent in the overall funded status of its promises to retirees, but at the Post Office, the poor funded status of the healthcare fund brings the overall funded status down from 85% to 73%; if there were no fund at all, the funded status would drop even further, to 63%.


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