UPDATE: Aetna Not Alone In Layoffs; Other Insurers Pare Jobs
(Adds details about WellPoint's job cuts.)
By Dinah Wisenberg Brin
Of DOW JONES NEWSWIRES
Aetna Inc. (AET) isn't the only health insurer paring its work force as the
managed-care industry faces rising medical costs, enrollment pressures and a
competitive marketplace.
WellPoint Inc. (WLP) has eliminated jobs over the past several weeks, although
the managed-care giant isn't providing any numbers or making any kind of layoff
announcement. In addition, Cigna Corp. (CI) has cut hundreds of jobs this year
beyond those announced in January.
The layoffs highlight the effects of the economic downturn, which has caused
the highest unemployment rate in the U.S. in 25 years, reducing the number of
commercial members. The job cuts also come ahead of anticipated government-led
changes to the nation's health-care system.
Wednesday, Aetna said it was cutting some 3.5% of its work force--625
positions immediately and about the same number in the first quarter of next
year. These reductions are in addition to the 1,000 job eliminations, or nearly
3% of its work force, that the Hartford insurer announced last December.
Meanwhile, Cigna has cut 1,810 jobs so far this year, a company spokesman
confirmed Thursday. That includes the 1,100 layoffs, representing 4% of its work
force, that the insurer announced in January. During the second and third
quarters, Cigna took charges for severance tied to the elimination of 710
positions, according to a recent Securities and Exchange Commission filing.
WellPoint, also in an SEC filing, said it made $18.5 million in payments in
the first nine months of this year related to employee terminations and
indicated it may incur charges in future periods related to job cuts. The
payments related to the 1,500 job eliminations, representing 3.6% of WellPoint's
work force, that the company announced in January; those eliminations included
900 open positions.
WellPoint hasn't updated layoff figures since January, although a spokeswoman
said Thursday that positions were eliminated and added in recent weeks. Those
recent job cuts came in addition to the earlier 1,500.
"As the economic environment changes, WellPoint reviews the size and skills of
our work force and makes adjustments as necessary. The current economic downturn
has affected our customers, and many employers have reduced the size of their
labor force in response. This in turn has affected the membership of WellPoint's
affiliated health plans. As a result, we are examining ways we can operate more
efficiently in 2010," spokeswoman Kristin Binns said earlier this month.
Meanwhile, WellPoint's recently announced decision to withdraw its UniCare
commercial plans from Texas and Illinois means a number of employees in that
division will lose their jobs, although the company said it doesn't yet know how
many of the 700 UniCare employees will be laid off.
A staff reduction will be necessary as 360,000 affected UniCare members switch
to another insurer, as most are expected to do next month, according to UniCare
spokesman Tony Felts. The business has about 285,000 members outside the two
states, he said.
UniCare expects the first staff reductions will start in January and continue
in phases throughout 2010, depending on how many stay with UniCare until their
policies expire sometime next year, he said.
-By Dinah Wisenberg Brin, Dow Jones Newswires; 215-656-8285; dinah.brin@
dowjones.com
(END) Dow Jones Newswires
11-19-091702ET
Copyright (c) 2009 Dow Jones & Company, Inc.
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