Aetna Laying Off 160, Mainly Managers In Innovation, Technology and Service Operations

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Aetna has started laying off 160 people, including 80 in Connecticut, as the health insurer continues to reduce expenses to prepare for stiff price competition starting in 2014 when many people will shop directly for coverage through an online health exchange.

Additionally, the health insurance industry has been pressured to slow the pace of rising premiums while profits are squeezed by federal health care reforms.

The job cuts were acknowledged publicly for the first time Tuesday as another round of workers was notified this week of their last day. The first wave of workers had their last day in September, and more will continue to leave in stages through early 2013, the company said.

The people losing their jobs are primarily managers, and their assistants, in Aetna’s Innovation, Technology and Service Operations, known by the acronym ITSO, a company spokeswoman said. The staff cuts are in IT and other service functions. Aetna’s ITSO includes a wide range of service operations, including procurement, real estate, IT infrastructure and program-and-delivery testing.

Aetna spokeswoman Cynthia Michener said the layoffs were announced internally in August as part of a “redesign to become more consumer centric and to more effectively and efficiently serve our customers.”

“Aetna has been working to bring our expenses in line with those of our competitors and get ready for the world of consumer exchanges in 2014,” Michener said. “We need to make these changes to more effectively compete in the marketplace that’s increasingly focused on affordability.”

Specifically, federal health care reform set up a new way to shop for health insurance directly through state-managed health exchanges. Some major employers are already responding to the new marketplace. For example, SEARS Holdings Corp. announced last week that it will no longer provide medical insurance to 90,000 employees nationwide, and, instead, will give employees a fixed allowance to buy a health plan on a private health exchange.

Aetna has been paring down its workforce in recent years.

“Staff reductions are never easy,” Michener said. “These decisions are not made lightly. We are providing support services for these employees.”

The employees losing their jobs will receive nine weeks’ pay, or “salary continuation.” Some are also eligible for a severance package based on years of service and compensation.

Last year, Aetna eliminated more than 400 jobs in Connecticut through a voluntary early retirement offer, reducing the company’s in-state workforce to 6,700. In total, 1,700 Aetna employees took the offer last year.

Aetna had 6,700 employees in Connecticut and 34,800 companywide as of June 30.

About Matthew Sturdevant

Full-time staff journalist at The Hartford Courant and magazine freelancer with a master's degree in writing from Dartmouth. My work has appeared in The Los Angeles Times, The Chicago Tribune, Taiwan News, The Baltimore Sun and many other news sources. My blog has been referenced by Politico.com, the Kaiser Family Foundation, the Georgetown Law Library and a number of organizations in healthcare and business. Sturdevant’s blog is "a well-written wealth of ideas," said The Donald W. Reynolds National Center for Business Journalism, (businessjournalism.org, May 18, 2011). I have experience writing for newspapers, magazines, Web sites and blogs as well as shooting and editing video. I made regular appearances on news-talk radio and on the NBC affiliate station in Corpus Christi, Texas. I made occasional appearances on the Fox affiliate in Connecticut promoting Hartford Courant articles.

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