Biden signs USPS reform legislation into law, as agency seeks higher mail prices

A long-awaited reform bill expected to save the Postal Service a total of $107 billion is now law.

President Joe Biden signed the Postal Service Reform Act into law Wednesday. The House and Senate passed the bill with strong bipartisan support last month.

The legislation will eliminate a 2006 mandate from Congress to pre-fund retiree health benefits, a requirement that Biden said “stretched the Postal Service’s finances almost to the breaking point, with real consequences.”

“This bill recognizes the Postal Service as a public service, and we’re ensuring that it can continue to serve all Americans for generations to come,” Biden said at Wednesday’s signing ceremony.

The legislation also forgives USPS’s obligation to pay $57 billion in scheduled payments to its retiree health benefits fund.

USPS, meanwhile, is seeking approval from its regulator to once again raise first-class mail prices by approximately 6.5%. That would raise the price of a first-class stamp to 60 cents. The new prices would take effect July 10.

“The price changes reflect a judicious implementation of the Postal Service’s pricing authority provided by the Postal Regulatory Commission,” USPS wrote in a press release.

The agency last summer raised the price of many of its mail products by about 6.8% and increased the price of a first-class stamp from 55 cents to 58 cents. It also raised the price to deliver magazines, newspapers and catalogs by 8.8%.

USPS raised the price of a first-class stamp from 50 cents to 55 cents in January 2019, the biggest price increase in the agency’s history.

Stephen Kearney, president of the Alliance of Nonprofit Mailers, said the agency’s decision to seek higher prices was “predictable,” given that USPS so far has made full use of new pricing flexibility finalized by its regulator in 2020. 

“Hopefully, in the not too distant future, rate-paying mailers will see some benefit from Delivering for America and the Postal Reform Act of 2022. Not this year,” Kearney said.

The agency last fall also instituted new service standards that slowed the expected delivery of nearly 40% of first-class mail.

While USPS on-time delivery has generally improved since the start of the COVID-19 pandemic, the agency told the Postal Regulatory Commission last month that it will take several years for service to reach its goal of 95% on-time delivery.

“The Postal Service intends to transition to 95% over several years as the infrastructure and network changes necessary to achieve this performance are implemented,” USPS wrote to the commission.

USPS announced last week it delivered 87.5% of first-class mail on time between Jan. 1 and March 25 this year, a nearly 2% decrease from the first quarter of fiscal 2022.

The reform bill signed Wednesday also requires all future postal retirees to enroll in Medicare parts B and D.  It also creates a new Postal Service Health Benefits program (PSHB)  within the Federal Employee Health Benefits (FEHB) program starting in January 2025.

All postal employees and postal annuitants will be offered their earned health benefits through the PSHB program at that time.

The National Active and Retired Federal Employees Association (NARFE) said analysis of the new PSHB program shows it should lower the average cost of coverage, as well as plan premiums, for both PSHB and FEHB plans, which will benefit postal other federal enrollees.

“As such, PSHB plans should provide the same coverage to postal employees and retirees, but with lower premiums,” NARFE wrote in a fact sheet on the legislation.

Biden said the legislation will generally “streamline health care for postal workers.”

“They deliver for us through rain and snow and sleet, and we’re making sure that health care they need will be there for them as well,” he said.

NARFE National President Ken Thomas said in a statement that the bill ends the “overly burdensome mandate” to prefund future postal retiree health benefits, a requirement NARFE has long worked to repeal

“As enacted, this law preserves choice for current postal retirees regarding Medicare Part B enrollment and protects all postal and federal employees and retirees from unintended premium increases resulting from the creation of the Postal Service Health Benefits program,” Thomas said.

The legislation requires USPS to develop an online public dashboard that will be updated weekly with local and national service performance data.

The legislation also allows USPS to partner with state, local and tribal governments to offer more non-postal services to the public.

“Imagine a trip to the post office where you can pick up your bus pass, or your hunting license or your fishing license,” Biden said.

Biden added there are “more areas where we want to see the Postal Service leading,” including purchasing more electric vehicles as part of its next-generation delivery fleet.

“It needs to do more to modernize and electrify its fleet of vehicles to reduce greenhouse gas emissions and to save money. We’re going to do that. I’ll continue to fight for these common-sense improvements,” Biden said.

While the Biden administration has pressured USPS to make electric vehicles a top priority, he also outlined the agency’s recent successes.

Biden said USPS “stepped up” to deliver more than 320 million COVID tests to individuals in every state, territory and military base in the world.

“Impressive turnaround for an unprecedented task, and it’s continuing truly heroic service that they provided throughout this pandemic,” Biden said.

In the 2020 general election, 43% of the votes cast were mail-in ballots, and it took on average less than two days for ballots to get from the voters to election officials — faster than the faster delivery time for first-class mail.

Annette Taylor, a member of the National Association of Letter Carriers who introduced the president, said the legislation recognizes USPS as an “essential facilitator of our democracy and our economy.”

“We know there is more to do to secure long-term viability, but today is a huge step forward,” Taylor said.

American Postal Workers Union President Mark Dimondstein called the bill’s signing a “historic achievement for our union.”

“The Postal Service Reform Act marks a tremendous victory for our union, for all postal workers, our families, and for the people of the country who depend on robust, reliable and sustainable universal postal services,” Dimondstein said.

The bill’s biggest supporters in Congress attended the White House signing ceremony. Senate Homeland Security and Governmental Affairs Committee Chairman Gary Peters (D-Mich.) and Ranking Member Rob Portman, Sens. Tom Carper (D-Del.) and Thom Tillis (R-N.C.) joined Biden onstage.

Also onstage were House Oversight and Reform Committee Chairwoman Carolyn Maloney (D-N.Y.), Ranking Member James Comer (R-Ky.), Government Operations Subcommittee Chairman Gerry Connolly (D-Va.), National Security Subcommittee Chairman Stephen Lynch (D-Mass.) and Rep. Brenda Lawrence (D-Mich.), a committee member and former USPS employee.

Senate Majority Leader Chuck Schumer (D-N.Y.), House Speaker Nancy Pelosi (D-Calif), House Majority Leader Steny Hoyer (D-Md.) and Majority Whip Jim Clyburn (D-S.C.) also joined the president during the ceremony.

Hoyer said in a statement said the legislation provided “urgently needed reforms” for USPS.

“This law will help strengthen the financial outlook of the USPS and will eliminate burdensome financial obligations it must bear, foremost by integrating Medicare for employees and eliminating the requirement to pre-fund retiree health benefits. Both of these provisions will be vital to saving the agency billions of dollars that can be reinvested in its workforce and in improving its services,” Hoyer said.

Meanwhile, Biden’s latest two picks to serve on the USPS Board of Governors are moving on to a Senate floor vote. HSGAC advanced the nominations of Dan Tangherlini, former head of the General Services Administration, and Derek Kan, former deputy director of the Office of Management and Budget.

While the committee unanimously approved both nominees by voice vote, Sens. Rick Scott (R-Fla.), Josh Hawley (R-Mo.) and James Lankford (R-Okla.) asked to be marked as voting “no” for Tangherlini’s nomination.

The Postal Service Reform Act is the first major postal legislation to make it out of Congress. House and Senate lawmakers introduced many similar bills in recent years that never made it far in either chamber.

“it only took what? Eleven years? Twelve years,” Biden said. “That’s pretty fast, right?”

“It seems like more,” Tillis told the president.