USPS Woes Continue: Health Plans, Be Prepared

If you follow postal news, you know the rhythm by now. A rate increase gets announced, budgets get adjusted and everyone moves on until the next one. Command Direct covered the July increase and how sharp mailers should respond when it took effect.

But the discussion surrounding the United States Postal Service (USPS) is becoming increasingly complex. The question is no longer limited to the cost of mail. It is whether the long-term stability of the postal system can be sustained. USPS is not going away, but ongoing financial pressures are likely to result in more frequent rate increases and continued service challenges. For health plans, whose operations depend heavily on timely and compliant member communications, this trend carries significant implications.

What’s actually happening

The USPS has lost money nearly every year since 2007, including $9 billion in fiscal 2025. First-class mail volume keeps falling as communication moves online, yet USPS remains legally obligated to reach more than 169 million addresses six days a week. Its largest historical revenue source has shrunk while the cost of the network has not. That structural imbalance sits at the center of everything else.

What makes this moment different is how quickly the projections keep moving. Earlier this year, analysts warned USPS could exhaust its available cash within twelve months. By June, after regulators waived roughly $15 billion in required retirement payments, Postmaster General David Steiner told Congress the crunch had shifted to the early 2030s. That is real relief. But as Steiner himself put it, the agency is “basically borrowing money from our retirement plans to fund current operations.”

The uncertainty extends well beyond the balance sheet. USPS has restricted nonessential spending. Pieces of its decade-long Delivering for America modernization plan have been paused, restarted, or scaled back. Processing facilities are being consolidated and decommissioned, and industry groups and lawmakers are openly calling for parts of the plan to be halted. Rates, delivery standards, entry points, and the facility network itself could look different in a few years, in ways no one can predict.

Why health plans can’t sit this one out

A retailer responds to rising postage by mailing less. Health plans don’t have that option.

Annual Notice of Change (ANOC) documents, appeal and grievance determinations, provider directories, explanation of benefits (EOBs) and other regulatory notices must be delivered accurately, on time, and in compliance with federal and state requirements, regardless of what happens at USPS. Required mail has a floor. And the timing is not abstract: ANOC season is weeks away, which means the largest mail event of the year will be produced and delivered at the new rates, under these conditions.

So the useful question is not “what will USPS do next?” You can’t control that.

The useful question is, are we sending the mail we are required to send as efficiently as possible?

Consider the trajectory. A Forever stamp cost $0.55 in early 2021. Today it costs $0.82, a nearly 50% increase in five years. Few administrative expenses have grown that fast while receiving that little strategic attention.

Look at the numbers

Consider a hypothetical regional plan with 500,000 members that sends an average of one required communication per member per month: ID cards, ANOCs, EOBs, determination letters, directory notices. That is roughly six million mail pieces a year. At the new rates, an increase of about three cents per piece adds roughly $180,000 a year in postage. That is the number most organizations will focus on.

Now look at the number almost nobody calculates. If just 1.5 percent of that plan’s mail comes back undeliverable, that is 90,000 returned pieces a year. Industry analysis places the fully loaded impact of a single undeliverable piece (research, updated member information, re-mailing, documentation, compliance oversight) at $3 to $4 per piece. That is more than $300,000 a year, before accounting for the compliance exposure of members who never received a required notice.

The rate increase everyone is talking about costs this plan less than the operational problem almost nobody is measuring.

Put simply: your postage bill is not your biggest mail problem. Your undeliverable mail is.

Mail better, not less

Unlike postage rates, most of these costs are controllable.

Plans that put address hygiene, National Change of Address (NCOA) processing, and automated return mail workflows in place typically eliminate 40% to 70% of return mail costs. That alone more than recovers the entire rate increase without cutting a single required communication.

Composition tells the same story: Removing an unnecessary page, tightening an insert, or keeping a statement under an ounce break is worth pennies per piece. And pennies per piece, at regulatory volume, is another six-figure line item.

Print isn’t the only lever, either. For members who have consented to electronic delivery, shifting eligible communications to compliant digital channels removes postage from the equation entirely, provided consent management and regulatory requirements are handled correctly. Plans that manage print and digital as one connected strategy see the complete picture of total communication cost.

Five questions worth asking

As your organization weighs what the USPS news means, start here:

• Are we measuring the total cost of every mail piece or only postage?
• How much is undeliverable mail costing us each year, in dollars and in compliance risk?
• Are our document composition and mail preparation processes as efficient as possible?
• Are we capturing every postal optimization opportunity available to us?
• When was the last time we reviewed our end-to-end member communication process?

If the honest answer to that last question is “more than a year ago,” that is the place to begin.

A final thought

USPS will keep evolving, and the headlines will keep coming. Health plans can’t control what happens in Washington. What they can control is how efficiently every required communication is designed, produced, and delivered. Organizations that understand the full cost of every mail piece will manage whatever comes next from a position of strength.

Monika Swienc is the business development leader at Command Direct, a healthcare communications company.