Neither rain, nor snow, nor sleet, nor hail… but health care costs stop the postman

Email and social media may be contributing to the decline of the United States Postal Service, but retiree health care costs are what’s really killing it. When your local post office closes and Saturday delivery ends, you can blame Facebook and Google if you want, but the health care system is perhaps a more deserving culprit.

The postal service is mandated by Congress to pay about $11 billion per year for retiree health benefits. That’s a huge chunk of the $14 billion in expected losses for 2012, and it looks like that $11 billion might not be paid in this year. I don’t know what the USPS pays for health care for active staff and dependents but no doubt it’s also a significant contributor to the fiscal gap.

Health care costs are a major drag on the public and private sectors. As I pointed out a couple weeks ago, four of the six major financial challenges facing the states are health care related. The federal budget deficit is largely a function of health care spending. And of course companies and individuals face challenges paying for health care, too. Other countries face health care cost challenges, too, but no one has it as bad as the US. If anything, our demographics make us lucky, because our elderly population comprises a lower share than in Western Europe and Japan.

I can understand why critics of ObamaCare rail against the individual mandate and other coercive aspects of the Act. Sure, it can seem un-American to force someone to buy something. But our current health care system is a serious drag on the economy and on private enterprise. It sounds heretical but maybe a real “government takeover” of the health care system with serious “rationing” is what we need to revive capitalism.

July 31, 2012

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