Health insurers are hearing it from their own retirees about reduced health and dental benfits.
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Get Your Report Now!At Aetna's annual meeting at its headquarters in Hartford on Friday, retirees
accused the company of breaking promises, according to the Hartford Courant.
John J. Dwyer, a retired Aetna senior vice president and shareholder, said nothing
in his company documents warned that his benefits could be cut or reduced 10
years after his retirement. "It is nothing less than a breach of promise, and that is unacceptable,"
Dwyer told the gathering.
What makes him even more rueful, he said, is knowing he had been responsible
for 2,500 early retirements at the company. "It never occurred to me that
the benefits they would rely on would be eroded or eliminated in subsequent
years."
The Courant reports that a reinvigorated Aetna is making millions again--but
also phasing out medical insurance subsidies for employees who retire in 2004
or later. It already has stopped paying for dental coverage for employees who
retired Jan. 1, 2003, or later. As of Jan. 1, 2005, Aetna will end the dental
subsidies for its other retirees.
Aetna chief executive Dr. John W. Rowe said the company has to keep expenses,
including employee and retiree benefit costs, under control because Aetna's
overhead as a percentage of revenue is still higher than that of its peers'.
"This expense gap makes it much harder for us to price our products competitively,
increase revenues and achieve and sustain profitable growth," Rowe said.
Rowe also argued that Aetna must strike a balance in benefit changes between
the active employees and the retirees. He said he did not believe it was justified
to put the burden only on active employees.
He went on to note that employees are worried about Aetna shipping jobs overseas,
including information technology positions. About 1,000 people already serve
the company overseas, mostly in India and Ireland, either in outsourced positions
or as employees.
Outsourcing, Rowe said, is a "very effective means for us to have the
flexibility to ramp up for individual projects" quickly.
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