160 Aetna Employees In Connecticut To Be Laid Off — More Cuts Coming Next Year
November 19, 2009
As its customer base slips and health care reform looms, Aetna is laying off 625 employees now and will make a similar number of reductions early next year, the company said Wednesday.
The current cuts include 160 jobs in Connecticut, a spokesman said. No figure is available for Connecticut layoffs in the 2010 round.
The layoffs are across many areas of the company, and Aetna is not exiting any markets or businesses, the company said.
Aetna grew rapidly between March 2007 and September 2008, adding 5,700 jobs nationwide, including several hundred in Connecticut, where the company has 7,700 employees, mostly at its Hartford headquarters. The company had about 1,000 layoffs at the end of 2008 and no layoffs till now in 2009.
Aetna, which had 19 million insured medical members in the middle of this year, expects that number to drop to 18.7 million by the end of the year. It expects to lose between 600,000 and 650,000 in the first three months of 2010, spokesman Fred Laberge said.
The reasons for the decline: Aetna's customer companies have fewer employees as a result of the recession, and Aetna has been forced to set higher prices as a result of rising medical costs. Prices are rising across the industry, but Aetna in recent years had priced some of its plans aggressively to attract more members.
Besides the economic factors, said Ronald A. Williams, Aetna's chairman and chief executive officer, "we must prepare for the impact that health care reform and regulatory changes may have on our business. ... Streamlining our businesses now will enable us to improve our competitiveness and redirect resources to areas with a greater potential for future growth."
Many people have made predictions about the effect of health care reform on the employment and financial health of health insurers, as at least three versions of the reforms wend their way through the U.S. Senate and House. Health insurers, including Aetna, have warned that some measures — including a public health plan run by the government, and a weak version of universal coverage mandates, could hurt private health plans.
By partly attributing its current round of layoffs to the reforms, even indirectly, Aetna is likely to heighten the debate about how reforms will affect private insurers.
Aetna is moving about 3,600 workers from its Middletown location to Hartford. The layoffs are not related to that move. Aetna will take a $40 million charge against earnings in this quarter for severance costs, and expects to take a similar charge in the first quarter of 2010.
Aetna shares closed at $29.21 Wednesday, up 6 cents on the New York Stock Exchange before the late-afternoon announcement.
Reprinted with permission of the Hartford Courant.
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