Proposed USPS Rate Hike linked to FEHB premium increases by USPS

Earlier today, the USPS Board of Governors proposed to increase the price of a first class stamp from 39 cents to 42 cents in 2007. In its press release, the Board blamed the increase on rising fuel costs and on FEHB premiums: “Like other businesses, the Postal Service has also experienced significant growth in health benefit payments for more than 621,000 current employees and 445,000 retirees. In 2005 alone, these costs increased by $437 million, reaching a total of $6.6 billion.” But that’s only a 7.1% increase, which is pretty reasonable these days.

The Washington Post reports that Rep. Tom Davis (R-VA), who chairs the House Government Reform Committee, immediately criticized the decision in a press release “I am disappointed the Board of Governors did not see fit to wait until comprehensive postal reform legislation becomes law before making a decision on whether to seek rate increases,” he said. “The bill that emerges from the House-Senate conference will most likely significantly alter the Postal Service’s costs and may alter the process by which rate cases are decided.” The proposal now goes to the Postal Rate Commission for review. Given Rep. Davis’s reaction, I think that we can expect a Congressional hearing on this.