GAO: Postal Service Health Plan Could Strain Medicare

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The U.S. Postal Service's proposal to create a health plan outside of the Federal Employees Health Benefits Program would likely lead to large monetary gains for the postal service but could also increase economic pressures for Medicare, according to a U.S. Government Accountability Office report.

The USPS proposal would result in about 1 million postal employees and retirees withdrawing from the federal benefits program. Under the proposed health plan, USPS', postal employees' and retirees' share of insurance premiums would first be established by the postal service. For union-covered employees, the premium shares would be determined through collective bargaining, according to the GAO.

The implementation of this plan would increase retirees' use of Medicare coverage, adding another $1 billion to the $550 billion the federal government spends on the program annually in the new plan's first year, according to the report. After that, USPS projects the plan would increase Medicare spending by $1.3 billion annually during the plan's first five years.

The GAO report notes Medicare is already considered fiscally unsustainable and recommends that Congress consider the economic effect the plan would have on the program.

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