Executives at the agency of Louisville-based health insurer Humana and its rival Aetna made backup plans, involving the changes to reassign and Humana job cuts, in the event their $37 billion acquisition tanked.
In fact, some weeks before the declaration Feb. 14 that the rivals mutually accepted to break up, Humana job cuts 500 positions in its At Home division. And this week, officials assured that they intend to trim an unspecified figure of positions while adding positions that fit more closely with the latest growth strategies of company. It is s part of the blueprint for moving ahead as an independent company.
“I am certain they had a Plan B and I am sure that is what they are executing from” now, said Robert W. Klein, an associate professor and an authority on risk management and insurance at Georgia State University.
Klein and fellow Georgia State professor William Custer prepared an analysis of Kentucky’s health insurance markets after Aetna applied to state’s insurance regulators for approval to achieve Humana.
Workers told the Courier-Journal shared details anonymously because they were not authorized to discuss Humana job cuts. The changes include eliminating positions, involving those in supervisory roles, and folding few operations together. For instance, previously separate Wellness and go365 groups are being folded into a latest agency, spokeswoman Kate Marx confirmed Thursday.
The revelations about cuts and the realignment came within a week after ten senior executives and 3 company board members, CEO Bruce Broussard, had sold blocks of shares totaling about $75 million – something they could not do as freely while the Aetna compliance was pending.
Klein stated that announcement that the company would withdraw from Affordable Care Act public exchanges by the year of 2018 was not a surprise, given the multi-million dollar losses Humana and other insurers have suffered while offering health coverage to a sicker than usual pool of customers. “They are just getting actually hammered by the risk” realities under the law. The fact that offering coverage did not permit for the usual “risk-based pricing” meant that companies would take a hit when disproportionate number enrollees have been sicker and more costly to care for, Klein said.
The loss of the ACA business, known as Obamacare, will mean that some lower-level employees working in call centers and claims processing likely will lose their jobs. But if the company grows its Medicare Advantage segment, as it intends, those with skills to transfer to other jobs will have an opportunity, he stated.
The researcher also said that “flattening the hierarchy is usual. You see this happening in other sectors of the insurance industry.”
Humana claimed last month it would intensify its concentration on its employer group business and work to forge relationships with new Medicare enrollees. Its plans also incolve expanding primary care clinics.
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