The option is still there but if you "win" the case you might get your feedback removed if the buyer left you neg feedback, BUT ebay use to actually refund you the money. They no longer refund you the money if you win the "item returned damaged" case. I was told that due to it being a "nice service" they offered in kind to sellers that it was not updated in the TOS agreement but they quietly stopped sending refunds for that type of case. just an FYI.
Its not that USPS should be on the hook its that ebay says they are no long going to cover you even if the item is returned damaged and they find the buyer at fault. Their suggestion (to protect yourself) is to purchase insurance in case the item "is damaged in transit"