Humana Layoffs: Insurer Plans To Cut 2,500 Jobs
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LOUISVILLE, Ky. — The insurer Humana said Wednesday it will cut about 2,500 positions as it adjusts to a smaller enrollment.
Its Medicare enrollment slid 24 percent last year to 3.4 million people, while its commercial enrollment fell 6 percent to roughly the same amount.
The Louisville company, however, said it will add 1,100 positions in growth areas like medical-cost containment and pharmacy management.
The net loss of 1,400 jobs amounts to 5 percent of its work force. The reductions will come mostly from attrition, outsourcing and job eliminations.
Humana said the changes would not affect its 2010 earnings guidance of between $5.15 and $5.35 per share.
Humana said it has to align its size with its membership. The insurer's total enrollment fell 11 percent last year. Humana finished 2009 with about 10.3 million people.
Humana Inc. sells commercial insurance and Medicare Advantage plans, administers Medicaid coverage and provides coverage through the military's Tricare program.
Kentucky Gov. Steve Beshear said he's confident Humana will emerge from the restructuring as "a more efficient and competitive business." Beshear said the state is ready to assist Humana with the restructuring and help people who lost jobs with the transition to new jobs.
"Make no mistake, today's news is difficult to hear," Beshear said. "We hope many of those displaced will be employed in these developing positions."
Louisville Mayor Jerry Abramson said the city will try to lure as many of the 1,100 new positions to Louisville as possible.
"I'm hopeful the restructuring will make Humana a stronger company and put it back on the road to the levels of job expansion we have seen in recent years," Abramson said.
Other health insurers also have announced job cuts over the past several quarters. Insurers have struggled during the recession with enrollment losses in their employer-based plans, as companies cut jobs and reduced the number of people covered by private insurance.
Aetna Inc. has cut 1,250 jobs since November. WellPoint Inc. and Cigna Corp. also have cut more than 1,000 jobs since the recession started.
Humana said the reduction will help it create "a more efficient, agile infrastructure," while also giving it resources to invest in growth opportunities.
Humana earned $250.7 million, or $1.48 per share, in the fourth quarter of 2009 on $7.63 billion in revenue.
The company's commercial segment reported a wider fourth-quarter pretax loss mainly due to a higher percentage of premiums going to cover medical claims along with other higher expenses. Chief Operating Officer Jim Murray said earlier this month Humana was "stepping back and reorganizing our commercial business."
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02/17/10 01:15 PM ET Associated Press