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May 03, 2004
Aetna Retirees Complain of Broken Promises

Health insurers are hearing it from their own retirees about reduced health and dental benfits.

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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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