I had been thinking of writing a piece linking healthcare reform with logistics, but I couldn’t think of the right angle.  Then President Obama opened the door for me with comments he made at a town hall meeting in New Hampshire on Tuesday (where the crowd was sedate compared to other town hall meetings).

In response to Ben Hershenson, a Republican from Maine, who expressed concern that creating a public option like Medicare would bankrupt the private insurance industry (“Who can compete with the government? The answer is nobody,” Hershenson said), President Obama used a logistics analogy to allay this concern:

“As long as they have a good product and the government plan has to sustain itself through premiums and other non-tax revenue, private insurers should be able to compete with the government plan,” Obama said.  “They do it all the time…UPS and FedEx are doing just fine. . . . It’s the Post Office that’s always having problems.”

 

As my good friend Evan Falchuk (COO of Best Doctors) commented on his blog yesterday, does the president really want to compare government-run healthcare with the Post Office, and FedEx and UPS with the “villainous” insurance companies?

According to USPS’s latest financial press release, “Despite cost reductions against the fiscal 2009 plan of more than $6 billion and actions to grow revenue, the Postal Service (USPS) projects a net loss of more than $7 billion at fiscal year-end…The Postal Service has incurred net losses in 11 of the last 12 fiscal quarters. The fiscal 2009 year-to-date net loss is $4.7 billion, compared to a loss in the same period last year of $1.1 billion, in spite of comprehensive, organization-wide cost reduction initiatives. The organization is working to mitigate a possible Sept. 30 cash shortfall of up to $700 million.”

(Interestingly, and ironically, USPS’s financial woes are compounded by an “obligation to pay $5.4 billion to $5.8 billion annually to prefund retiree health benefits. This requirement, established in the Postal Accountability and Enhancement Act of 2006, is an obligation that no other government agency has to pay.”)

The economy has also affected FedEx and UPS, but not to the same extent as USPS.  You can also argue that USPS would be in even worse financial shape if not for the help it receives from the private sector.  Back in August 2006, for example, USPS extended its partnership with FedEx through 2013, whereby FedEx Express provides airport-to-airport delivery of Priority Mail, Express Mail and First-Class Mail within the United States (the contract is worth approximately $1 billion per year for a minimum of seven years).  The Postmaster General at the time said, “The new contract allows the Postal Service and FedEx to continue our successful business relationship.  This relationship benefits postal customers by allowing us to maintain our high service standards while keeping costs affordable.”

Another example is USPS’ workshare program, whereby mailers work with private companies (like UPS and Pitney Bowes) to prepare, sort, and transport mail to local USPS distribution centers to qualify for lower rates.  A 2003 report from U.S. General Accounting Office highlights the significant cost savings worksharing provides USPS.

(The American Postal Workers Union, however, believes worksharing discounts are contributing to USPS’ financial problems—see recent statement from William Burrus, President of APWU, where he states, “The USPS has also rewarded mailers for programming their computers to include postal bar codes on mailings, and for sorting mail prior to placing it in the postal system. I informed the Senate committee that this process reduced postage for large mailers as much as four times greater than postal salaries.”)

In short, I don’t think President Obama’s USPS-FedEx-UPS analogy helped his cause very much.  If anything, it gave opponents of the healthcare bills additional ammunition.  I can hear their comments already: “If you think the lines at the post office are long, the lines will be even longer to see a doctor.”  And the perennial cost overruns at USPS only compounds the cost concerns ($1 trillion) many opponents have about healthcare reform.  Then again, is there any government-run agency that’s doing better?

I’m not a healthcare expert, so I won’t wade into this debate any further.  If you’re interested in healthcare reform, particularly from an employee benefit standpoint, I encourage you to bookmark Evan’s blog.  Again, he’s a personal friend, so I’m biased, but I think his postings are very informative and cut through a lot of the hype out there.

His company also has a logistics connection: Schneider National added Best Doctor’s services as an employee benefit back in June.  Before the economic downturn, driver shortages and turnover was an acute problem in the trucking industry (a problem that will return when economic conditions improve).  Much of the discussion at time was on the need to increase driver pay in order to attract and retain drivers.  In light of all the uncertainty related to healthcare these days, and Schneider’s decision to add this benefit, I wonder if healthcare benefits will act as a stronger employee recruiting and retention tool in the trucking/logistics industry than wages.  What do you think?

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