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.