House Passes Bill Easing Retiree Burdens for U.S. Postal Service

Long-sought changes would enroll retirees in Medicare and end agency’s requirement to prefund benefits

By Siobhan Hughes, WSJ, Feb. 8

WASHINGTON—The House passed legislation designed to keep the U.S. Postal Service financially viable, including by repealing a requirement that it prefund retiree health benefits, sending the measure to the Senate, where it also has broad support.

The measure passed the House by a lopsided 342-92, showing the bipartisan backing for a bill that has been more than a decade in the making. Senate Majority Leader Chuck Schumer (D., N.Y.) issued a statement immediately after the vote saying that his chamber would take up the measure soon.

The House vote “brings us one step closer to finally putting the Postal Service on a sound financial footing,” said Rep. Carolyn Maloney (D., N.Y.), chairwoman of the Oversight and Reform Committee. The committee’s top Republican, Rep. James Comer (R., Ky.) said the legislation will “modernize the Postal Service and ensure it remains a viable American institution.”

The cash-strapped agency has been reporting losses for years, stemming in large part from a drop in first-class mail and the requirement to prefund its retiree health benefits.

A companion bill led by Sen. Gary Peters (D., Mich.) currently has 28 sponsors, of whom 14 are Republicans, and he said Tuesday that he expected the bill to move quickly through the Senate, where the bill will need 60 votes to advance.

The bill would void a provision in a 2006 law that required the Postal Service to prefund its retiree health benefits. At the time, the postal service was required to make contributions of $5.4 billion to $5.8 billion a year from 2007 to 2016. It struggled to meet those targets. The Government Accountability Office reported in 2018 that the financial outlook for the program was poor as the Postal Service hadn’t made any contributions to the fund since 2010.

The bill would also require postal workers to enroll in Medicare when they reach 65 years old—something that Congress said about a quarter of the agency’s workers don’t do. That change alone would save the Postal Service about $36 billion over a 10-year period, the Postal Service estimates.

The bill would also require that the postal service continue to deliver mail six days a week and require greater financial transparency.

The National Association of Letter Carriers and other groups representing postal service workers and retirees said they supported the legislation.

The financial problems related to retiree health benefits coincided with a decline in first-class mail volume, as people increasingly turned to the internet to communicate and pay bills. The postal service lost about $78 billion from fiscal 2007 through fiscal 2019, the GAO reported in 2020.

More than a decade of losses have put the U.S. Postal Service in a dire financial situation. To understand how this happened, WSJ takes a look back at how the modern postal service became an entity balancing public service and the need for profit. Photo Illustration: Jacob Reynolds/WSJ

The postal service had long asked Congress to integrate its retiree health plans with Medicare and rescind the requirement to prefund its employee retirement benefits decades out into the future. The moves are a key part of a 10-year plan by Postmaster General Louis DeJoy to overhaul the agency’s operations and avoid more than $100 billion in projected losses.

“We are excited about the bipartisan progress we have seen in the last couple of weeks,” Mr. DeJoy said Tuesday ahead of the House vote, saying he hoped for speedy action in the Senate on the legislation.

Mr. DeJoy’s predecessor had sought similar legislative changes. Despite some bipartisan support, none have advanced in Congress. The retiree changes would account for about $58 billion in projected savings, the agency has estimated.

A pandemic boom in package shipments has slowed, the agency reported this week. The postal service posted an adjusted loss of $195 million for the Dec. 31 quarter, versus a profit of $727 million a year earlier, when excluding certain noncontrollable items.

—Paul Ziobro contributed to this article.

Write to Siobhan Hughes at siobhan.hughes@wsj.com