Postmaster General Patrick R. Donahoe urged lawmakers to take postal employees out of the Federal Employees Health Benefits Program (FEHBP) at a House hearing on March 27, claiming such a move would save the USPS $7 billion annually. The PMG said the Postal Service should be allowed to develop and run a separate health insurance program.

But Walton Francis, a federal health insurance expert, flatly rejected Donahoe’s assertion. “Their proposal isn’t going to save money. It’s going to cost money,” Francis testified. The USPS proposal also would “massively disrupt or destroy the FEHBP,” he said.

The proposal to withdraw from the federal health insurance plan is part of the Postal Service’s most recent array of legislative proposals, which includes plans to close or consolidate 223 mail processing facilities, shut 3,600 post offices, eliminate more than 100,000 jobs, and slow mail delivery.

Members of the House Committee on Oversight and Government Reform expressed doubts about the proposal.

Rep. Elijah Cummings (D-MD), the ranking Democrat on the panel said, “I am quite skeptical that the Postal Service can or should manage its own health insurance system.

“I suspect that the achievable cost savings would come not from shrinking healthcare costs, but from shifting them onto employees. Postal employees would likely receive less coverage under a Postal Service plan and they would pay a greater share of their health bills. Postal annuitants would also pay more, as they would be faced with paying an increasing share of their healthcare from their fixed retirement incomes.”

Even committee Chairman Darrell Issa (R-CA), who said he would probably support the proposal, told the postmaster general, “Let’s have no illusion. You’re just cost-shifting.” Rep. Issa is considered an ardent foe of postal workers, and has called for pay cuts and benefit reduction, limits on employees’ collective bargaining rights, and $3 billion worth of plant and post office closings.

The APWU vehemently opposes any plan to take postal employees out of the federal program, which is considered one of the best in the nation. Delegates to the union’s 2010 National Convention adopted a resolution that identified retaining the right to participate in the Federal Employees Health Benefits Program a “top priority.”