The nation's third largest insurer is joining the ranks of the most progressive companies and promising its wage-based employees a livable income, while also investing in less-than-traditional benefits.
Starting in April, Aetna is going to increase the minimum hourly wage for its U.S. employees to $16 per hour, and next year will expand health plan benefits.
About 5,700 Aetna employees in customer service, claims administration, eligibility and billing will get an increase, with an average rise of 11 percent; for some it could mean a raise of 33 percent.
The investment in higher wages, and in tandem higher 401(k) contributions, come as Aetna, like others, is vying in the new insurance market, with a growing individually-insured population and a more consumer-focused group market where members have a selection of plans via a private exchange or high deductible health plans.
"Healthcare is becoming a consumer industry," said Aetna CEO Mark Bertolini. "We are making an investment in the future."
The Great Recession, the Affordable Care Act and the need to enter digital modernity have all brought changes to health insurance workforces, with increased automation limiting the need for office parks full of people manually processing paper-based information and reimbursement.
In 2009, before Bertolini became CEO, Aetna reduced its workforce by 3.5 percent, in a bid to streamline business operations, limit real estate expenses, and invest in areas like technology, new products and services.
Since then, Aetna has expanded in a variety of areas, including provider-focused services in population health, wellness and disease management, and government-sponsored Medicare and Medicaid programs as well insurance exchanges -- with a strong digital engagement strategy for consumers and the pursuit of electronic data processing and adjudication.
In that time, too, Aetna's culture and workforce evolved -- to the point where some 40 percent of the company is based at home full-time, from division managers to nurse practitioner case managers to claims workers. Aetna told Reuters the remote workforce strategy yielded around $80 million in savings annually by reducing the need for 2.7 million square feet of office and lowering voluntary employee turnover to just 3 percent.
With those savings and other revenue (like the company's largest group contract ever) Aetna is expecting to devote about $14 million this year and $25 million next year to the employee raises and expanded health benefits, while projecting 2015 operating profit about $2.4 billion.
Starting next year, Aetna is also launching "an enhanced medical benefits" program that will help lower out-of-pocket expenses for the same employee population getting a raise, as well as another few thousand lower-middle earners. Participation in the program will be voluntary, and set on something of a sliding scale. "Depending on their situation, the savings to participating employees could be up to $4,000," the company said. "These changes align with Aetna's mission to build a healthier world, and will increase the financial security for many Aetna employees."
Aetna unilaterally raising wages to $16 per hour is the first such move among health insurers, though certainly not first in the greater American economy. Starbucks and Gap have recently made commitments to boost wages, while retailers like Costco, Trader Joes and Whole Foods have been paying employees well above federal and state minimums for more than a decade.