Thousands Leaving Aetna After Early Retirement Initiative

Jan. 31--Aetna will spend $330 million on early retirement packages, more than double the amount that Aetna spent when it last cut 1,700 people in 2011.

The company has declined to say how many people are exiting as a result of the program, but if the per-person cost is similar to what it was in 2011, that could suggest as many as 4,000 people are leaving the company with payouts.

In 2011, 1,700 people around the company took early retirement, including about 400 in Connecticut, reducing local employment from 7,100 to 6,733. The same rules for eligibility applied in 2011 and in 2016: their years of service plus their age had to add up to 65.

Aetna's full-year profits fell 5 percent compared to 2015, all because of the cost of paying people to leave the company. The after-tax cost to Aetna of the payments is $215 million.

One analyst on the earnings call Tuesday noted that the company was reporting substantial declines in its administrative costs, and asked if cuts of those magnitude could be permanent.

Chief Financial Officer Shawn Guertin replied, "We've had a pretty concerted effort to try to drive sustainable productivity gain. That's not one-time unique to 2017, this is really part of our ongoing approach to the business."

Aetna's Connecticut presence -- despite its 1.7 million square-foot Hartford headquarters -- has fallen by 25 percent over the last 15 years. In 2001, Aetna had 8,115 Connecticut employees. Before this round of cuts, the company said it had 6,000 workers in the state. Although Hartford is the headquarters, it is no longer has the greatest concentration of employees. More Aetna workers are based in suburban Philadelphia, at what used to be the headquarters of U.S. Healthcare.

Aetna is the third-largest insurance employer in Hartford, after Travelers and The Hartford.

Aetna spokesman Matt Clyburn said he couldn't say whether there were enough exits from early retirements to avoid layoffs in 2017.

At the time Aetna announced the early retirement package last year, he said: "We are constantly looking for ways to reduce operating costs, which includes reviewing how our resources are deployed."

Employees expressed frustration in online forums about the lack of communication about the workforce reductions, both those caused by the early retirement and any layoffs in the works.

Patricia Kelly, who teaches management at Quinnipiac University, worked at Anthem before going into academia. She worked in the planning and change division, which handled early retirement initiatives and layoffs after Anthem bought Wellpoint.

"I completely understand why individuals would be so upset," Kelly said, because of silence from Aetna.

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