Wednesday, March 30, 2011

Senator McCain's Healthcare Premium Amendment Explained

In offering Amendment 251 ot S. 493, the bill reauthorizing a number of Small Business Administration programs, Senator McCain proposes to reduce the Postal Service's share of the the health insurance premium from  81%  to 72%  and reduce the Postal Service's share of the life insurance premium from 100% to 33%.   According to the Government Accountability Office this would have saved the Postal Service $619 million in FY 2009.   Given increases in health insurance premiums, this is likely significantly higher today.

This amemdment has different effects for the Postal Service's unionized and non-union employees.    The Postal Service could implement this provision nearly immediately for its non-union employees.  For unionized employees, it takes benefits off of the negotiating table.  It would likely require the Postal Service to amend the language in the recently negotiated APWU contract to comply with the provisions in this amendment.   For the Postal Service's other three unions, the amendment changes the dynamics of contract negotiations as it would force a reduction in total compensation before negotiations begin.

The legislative language is not clear in two respects.
  • First, it is unclear whether the certification that needs to be filed before fiscal year 2012 requires that the Potsal Service paid no more than 72% of the health care premiums and 33% of the life insurance premiums in all of fiscal year 2011 or whether those percentages must apply for all pay periods beginning in fiscal year 2012.  If the former applies, Postal Service could see a significant cut in take home pay for the rest of the fiscal year to bring their share of premiums up to the level that Senator McCain is proposing.  
  • Second, it is not clear if the Federal Govrnment can pay the Postal Service for the postage that it would want to use in fiscal year 2012.   This could end all mail generated by the government, as the Postal Service would be unlikely to accept mail from the Federal Government without postage applied.  Members of Congress could use campaign or political party accounts to pay for newsletters and letters to constituants.  
Legislative Language

(a) IN GENERAL.--If the Postmaster General does not submit a certification described under subsection (b) to Congress before fiscal year 2012 and each fiscal year thereafter--

(1) no sums may be appropiriated from the United State Treasury to the United States Postal Service with respect to that fiscal year; and

(2) notwithstnding section 2005(a) of title 39, United States Code, the United States Postal Service may not borrow any money under that section with respect to that fiscal year.

(b) CERTIFICATION.--A certificatin referred to under section (a) is a certification that, with respect to the applicable fiscal year, the contribution by the United States Postal Service for employees for--

(1) life insurance benefits shall not exceed the maximum contribution provided for under section 8708 of title 5 United States Code; and

(2) health insurance benefits shall not exceed the maximum contributin provided for under section 8906 of title 5, United States Code

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