The U.S. Postal Service's financial woes worsened, with the mail delivery service reporting a loss of $1.6 billion for the third quarter of fiscal 2016. That was up from a $981 million loss a year earlier.

The report prompted calls that Congress address the post office's losses and reform the agency — including from the postal service itself.

"We incurred a net loss resulting, in part, from continued decreases in first-class mail volume and systemic financial imbalances associated with our retiree health benefit pre-funding requirements," said Chief Financial Officer and Executive Vice President Joseph Corbett.

The losses were caused partly by the expiration of a surcharge Congress had allowed the postal service to charge customers, forcing the standard postage stamp to drop from 49 cents to 47 cents in April and reducing revenue for the quarter by about $500 million. The rest of the losses mainly came from the USPS paying down its large pension and healthcare obligations.

Corbett tried to put the best face on the news, noting that the postal service's revenue was up by $117 million compared with the same period last year, but added, "Despite the encouraging numbers, net losses continue to mount. Our results in the quarter further underscore the need for legislative reform that provides the organization with greater financial stability," he said.

The Taxpayers Protection Allliance, a conservative group, said Corbett was being disingenuous by highlighting the end of the surcharge. "This rate increase was intended to provide a $4 billion cash infusion over two years at the expense to postal customers. Despite the intent that this surcharge was temporary, the USPS came to depend on this bailout and has asked that it be made permanent. Because this rate increase was applied to profitable products that lack market competition, an extension can only be perceived as nothing less than a bailout of a financially mismanaged government entity," it said.

The National Association of Letter Carriers, a postal workers union, argued the U.S. Postal Service was doing fine if you simply looked at its operating expenses, that is, its budget minus the pension obligation. The union has long argued that Congress went overboard when it required the the postal service to agressively pay down its pension and healthcare liabilities — benefits owed to the union's own members — because doing so makes the service's financial bottomline look bad.

"The red ink you hear about has nothing to do with the mail but rather with congressional politics — the 2006 decision by a lame-duck Congress to compel the Postal Service to do something no other entity in the country has to do: pre-fund future retiree health benefits. No other public agency or private company has to do this even one year in advance; USPS must pre-fund these benefits decades into the future," said union President Fredric Rolando.

Created by the federal government, the U.S. Postal Service is a quasi-private entity. It remains under congressional authority but is required to operate as an independent business. It does not receive federal funding and must rely on the sale of postage and related products for its operations. It reported a $5.1 billion loss in 2015, a $5.5 billion one in 2014 and a $5 billion one in 2013.

Retiree healthcare, pensions and workers' compensation are unfunded by about $86.6 billion. Congress mandated in 2006 that the Postal Service pay down those future obligations to ensure that taxpayers do not get stuck with the bill, and the postal service has been devoting about $5.6 billion annually toward that goal.