Aetna Inc.

Type	Public (NYSE: AET)
Founded	1853
Founder(s)	Eliphalet A. Bulkeley
Headquarters	Hartford, CT, USA
Area served	United States
Key people	Ronald A. Williams (Chairman) & (CEO)
Industry	Health Insurance
Products	Health Care Plans
Revenue	▲ $30.950 billion (2008)
Operating income	▼ $2.174 billion (2008)
Net income	▼ $1.384 billion (2008)
Total assets	▼ $35.852 billion (2008)
Total equity	▼ $8.186 billion (2008)
Employees	35,258 (2008)
Website	Aetna.com

Aetna, Inc. (NYSE: AET) is an American diversified health insurance company, providing a range of traditional and consumer directed health care insurance products and related services, including medical, pharmaceutical, dental, behavioral health, group life, long-term care, and disability plans, and medical management capabilities. Aetna is a member of the Fortune 100.

Contents 1 Operations 1.1 Members 2 Lobbying and Campaign Contributions 3 Quality of Care 4 Key people 5 History 5.1 Timeline 5.1.1 1850s 5.1.2 1860s 5.1.3 1870s 5.1.4 1880s 5.1.5 1890s 5.1.6 1900s 5.1.7 1910s 6 Recent company developments 7 2009 8 Life insurance policies on slaves 9 See also 10 References 11 External links

[edit] Operations

In 2005, the company had $1.1 billion in earnings.
Aetna's 2007 revenue, reported in 2008, was $27.6 billion.
Aetna's 2008 revenue, reported in 2009, was $31 billion.

[edit] Members

Aetna provides health care, dental, pharmacy, group life, disability, and long-term care insurance and employee benefits, primarily through employer-paid (fully or partly) insurance and benefit programs, and through Medicare. Membership numbers: (as of March 31, 2008)

• 17.467 million — medical members
• 14.166 million — dental members
• 10.951 million — pharmacy members
• 13.609 million — group insurance members
• 843,000+ — health-care professionals
• 490,000+ — primary-care doctors and specialists
• 4,919 — hospitals

[edit] Lobbying and Campaign Contributions

Aetna has spent more than $2.0 million in 2009 on lobbying to attain legislation that the company favors.^[1] The company spent $809,793 between January, 2009 and the end of March, 2009 -- up 41 percent from the same period in 2008.^[2] Aetna's campaign contributions include more than $110,000 to US Senator Joe Lieberman (ID-CT) so far in 2009.^[3] From 2005 through 2009, Aetna contributed $56,250 to Senator Max Baucus (D-MT), chairman of the Senate Finance Committee, making Aetna the senator's seventh highest contributor over that time period.^[4]

[edit] Quality of Care

In the California Health Care Quality Report Card 2009 Edition, Aetna received 2 out of 4 stars in both Meeting National Standards of Care and How Members Rate Their HMO, for a rating of "Fair" (out of "Poor," "Fair," "Good," or "Excellent").^[5]

[edit] Key people

It was announced on January 4, 2006 that Mr. Ronald Williams would succeed Dr. John W. Rowe as CEO as of February 14, 2006. Williams was recruited from WellPoint Health Networks Inc.^[6] Dr. Rowe remained Executive Chairman until he retired at the end of 2006. ^[7]

On July 24, 2007 it was announced that Mark Bertolini, Executive Vice President of Business Operations, would serve as President of Aetna.

• Ron Williams - Chairman and CEO
• Mark Bertolini - President
• Meg McCarthy - Senior Vice President and Chief Information Officer
• Joseph Zubretsky - Chief Financial Officer

[edit] History

Aetna is the direct descendant of Aetna (Fire) Insurance Company, of Hartford, Connecticut.^[8][9] The name was meant to invoke Mount Etna, at the time Europe's most active volcano.^[10]

[edit] Timeline

[edit] 1850s

• 1850 Aetna began operation of an Annuity Fund to sell life insurance, choosing Hartford, Connecticut judge Eliphalet Adams Bulkeley, who was a general counsel to the company and on its board of directors, to head it.^[10] At the time, some church leaders and others believed life insurance was sinful.^[9]
• 1853 The Annuity department separated from Aetna Insurance to be incorporated as the Aetna Life Insurance Company, with Eliphalet Bulkeley as president. The name "Aetna" was retained to capitalize on the reputation of the original Aetna; in addition, three years of life insurance policies already had been issued under that name.^[10]
• 1854 Aetna hired its first full-time employee, Thomas O. Enders, later to become company president.^[10]
• 1857 Aetna moved to new offices on Hungerford and Cone Streets in Hartford. The Panic of 1857 struck Hartford and the nation, causing the closing of all but one bank and many other businesses. Eliphalet Bulkeley blocked a move to liquidate the company during the economic downturn. His tough underwriting and conservative pricing kept the company solvent.^[10][9]
• The Aetna Insurance Company issued life insurance policies on an undetermined number of African-American slaves, naming their owners as beneficiaries. ^[11]

[edit] 1860s

• 1861 Aetna began offering participating life insurance policies which paid dividends to policyholders just as the mutual life insurance policies did, giving Aetna an improved ability to compete in the marketplace. Aetna launched its new product with a promotional effort including higher commissions for its agents while most companies were cutting back due to the outbreak of the Civil War and the consequent loss of premium payments from Southern policyholders. However, the death toll of the war coupled with the booming wartime economy caused an expansion of the life insurance business to match Aetna's expansion, turning Aetna into one of the nation's leading life insurance companies.^[10][9]
• 1865 By 1864 Aetna had increased its volume of business by 600% over 1861 and its annual premium income ninefold, exceeding one million dollars. As a result, Aetna possessed the financial stability and resources it needed to meet the stringent regulatory requirements placed on life insurance companies in Massachusetts and New York; by 1865 the company was authorized to begin soliciting business in these states. For the first time since 1857 Aetna paid a large cash dividend, the size of which exceeded the combined total of all previous dividends.^[10]
• 1867 Company income rose from $78,000 in 1861 to $5,129,000 by 1867. Aetna moved to its third home office at 670 Main Street, Hartford. Aetna issued its first farm mortgage loan. By 1872, Aetna had 27% of its assets in farm mortgages; it subsequently became one of the two largest national firms in the farm mortgage field. By 1924, Aetna had 94 million dollars, 43% of its assets, invested in farm mortgages. It ended this line of business in 1947.^[10]
• 1868 Aetna altered its business practices, hiring its first actuary and abandoning the half-note premium system, a widely used insurance standard, in favor of an all-cash premium plan. Aetna was the second company to switch from the half-notes; within three years, every major company but one had done likewise. Aetna also built into new policy contracts an emphasis on such consumer-oriented items as nonforfeiture clauses and paying policyholder dividends after the first year rather than the fifth, as was generally done. Aetna began publication of The Aetna, the company's first periodical.^[10]

[edit] 1870s

• 1872 Eliphalet A. Bulkeley died and Thomas O. Enders became president.^[10]
• 1878 Aetna increased its capitalization from $150,000 to $750,000.^[10]
• 1879 Enders' failing health forced him to resign and Eliphalet Bulkeley's son Morgan G. Bulkeley replaced him.^[10]

[edit] 1880s

• 1888 Aetna outgrew its old offices on 670 Main Street in Hartford and purchased its fourth home office, next door at 650 Main Street; the first building Aetna actually owned, and Aetna's home office for the next 42 years.^[10]

[edit] 1890s

• 1891 Aetna issued its first accident policy, purchased by Morgan Bulkeley himself. Bulkeley had planned to enter the accident insurance field as early as 1882, when he pushed for a Connecticut law that would allow a chartered life company to write accident coverage as well. This was the first step in the thirty year process of transforming from a life insurance company to a company that offered a wide variety of coverages for almost any insurance need.^[10]
• 1892 Aetna held its first general agents conference in Chicago.^[10]
• 1899 Aetna became one of the first publicly held insurance companies to enter the health insurance field. Most large insurance companies held off until later, when they had developed the statistical bases to set correct pricing and trained a sales force which could sell enough policies to reduce risk volatility. Aetna introduced the new product as a marketing tool for its life insurance and accident insurance lines of business, therefore restricted its availability to customers of those policies.^[10]

[edit] 1900s

• 1902 Aetna created an Accident and Liability department to offer employers' liability and workmen's collective insurance, in reaction to the growing strength of the Progressive social reform movement and the increasing complexity of the industrial base. This would become the cornerstone of the Aetna Accident and Liability Company in 1907, which rapidly moved into more varied lines of property and casualty insurance, e.g. coverage of horse teams, breakage of flywheels, automobile collision, plate glass and burglary, as well as surety bonds.^[10]
• 1903 An Engineering and Inspection Division was created to improve workplace safety.^[10]
• 1904 Aetna introduced its first corporate seal, conveying Aetna's status as the largest life insurer in the world writing accident, health and liability coverage; the logo portrayed the company's home office bursting out from within a globe, with large block typeface spelling out Aetna's ranking.^[10]
• 1907 Aetna created a casualty subsidiary to handle items such as automobile property coverage; Aetna soon began aggressively expanding into related lines such as collision and damage. This business developed into the Aetna Casualty and Surety Company.^[10]
• 1908 Aetna hired its first home office female employee (Julia Kinghorn, telephone switchboard operator), the first of what has become more than two-thirds of Aetna’s employees.^[10]

[edit] 1910s

• 1910 Under the management of E. E. Cammack, Aetna began using Hollerith punched cards machines for tabulating and hired 35 women to input mortality statistics on keypunch machines, the company's first female home office clerks.^[10]
• 1911 Aetna began its first national advertising campaign. The same year, Aetna formed a bond department to market fidelity and surety coverages.^[10]
• 1912 Aetna introduced the first combination automobile policy, with several separate types of coverage combined into one contract. Several Aetna insureds were killed on the Titanic.^[10]
• 1913 Aetna formed its second affiliate, the Automobile Insurance Company, to write fire insurance on cars. This soon expanded to include windstorm, tornado, leasehold, and ocean and inland marine insurance. Aetna formed a Group department to sell group life insurance, one of the first insurers to do so; the first step towards Aetna’s current health care business.^[10]

[edit] Recent company developments

In 1960, Aetna expanded outside the U.S., buying a Canadian company, Excelsior Life Insurance Company. In 1968, it bought a majority interest in Producer's and Citizen's Cooperative Assurance Company, of Sydney, Australia. In 1981, it bought a 40 percent interest in two Chilean companies, and soon thereafter invested in ventures in England, Spain, Hong Kong, Taiwan, Indonesia and Korea.

Between 1996 and 1999, Aetna initiated a series of company acquisitions. In 1998, Aetna bought NYLCare Health Plans for $1.05 billion, adding 2.2 million members. The next year, it bought Prudential HealthCare for $1 billion, making it the largest provider of health benefits in the U.S., with more than 21 million members. The company spent more than $20 million that it received in fees and premiums from customers to revamp its computer systems, enabling the company to identify and discontinue unprofitable accounts. With this new and extensive information about policyholders, new management, and a shift in strategy, Aetna sharply raised premiums on less profitable accounts. Within a few years, Aetna shed 8 million covered lives due to premiums that customers could no longer afford.^[12]

In 1999, a jury in California awarded $116 million in punitive damages for "malice, oppression and fraud" to a patient's widow who contended he died after a subsidiary of Aetna delayed approving treatment for stomach cancer that its own doctors had recommended. Lawyers on both sides called it the largest such verdict against a health maintenance organization. In 2001 a settlement was reached.^[13][14][15]

In 2000, Aetna hired John W. Rowe as CEO and executive chairman. Rowe cut about 15,000 jobs and raised insurance premiums by about 16 percent per year. He also shrunk Aetna's customer base from 19 million members to 13 million by abandoning unprofitable markets, including almost half of the counties nationwide in which it offered Medicare products.^[16][17]

In 2000, Aetna sold its financial services and international businesses to ING for $7.7 billion, spun off its health business to its shareholders, thus focusing its business as an independent health and group benefits company.

In 2000, the U.S. Court of Appeals affirmed a $1,855,000 federal jury award for Brokerage Concepts Inc. (BCI) against Aetna U.S. Healthcare (formerly U.S. Healthcare), its Pennsylvania subsidiary, and one of its former senior executives, Richard Wolfson. In its suit, BCI accused Aetna U.S. Healthcare of tortuous interference with contractual relations. BCI alleged the managed-care company used its economic power in the business of prescription drug sales to coerce one BCI's clients, the "I Got It at Gary's" pharmacy chain, into using another Aetna U.S. Healthcare subsidiary, Corporate Health Administrators, as its health benefits management firm. According to the suit, Aetna U.S. Healthcare threatened to drop "I Got it at Gary's" from its pharmacy network if the company didn't switch to Corporate Health Administrators.^[18]

In 2001, the Maryland Insurance Commissioner ordered five Maryland health plans to pay a total of $1.4 million in penalties for failing to comply with the state's claims payment practices; Aetna was cited twice and ordered to pay the largest fine of $850,000. ^[19]

In 2001, the State of Texas fined Aetna $1.15 million for failing to promptly pay doctors and hospitals for services. Texas Insurance Commissioner Jose Montemayor also ordered Aetna to pay restitution to physicians and health care providers who did not receive timely payment for claims.^[20]

In 2002, the New York Department of Insurance fined Aetna US Healthcare and UnitedHealthcare a total of $2.5 million, citing a litany of bungled claims, improper treatment denials, unlicensed health insurance agents, and poorly performing claims processors using out-of-date software.^[21]

In 2002, Aetna agreed to streamline communications, reduce administrative complexity, and improve the quality of the health care system, ending litigation between Aetna and 700,000 physicians and medical societies. The physicians' lawsuit, settled for $470 million, charged Aetna with systematically reducing payments to physicians and overriding their treatment decisions. ^[22] The agreement also resulted in establishment of an independent foundation (Physicians’ Foundation for Health Systems Excellence) to focus on critical health care issues and a physicians’ advisory board. Around this time, Aetna also became a founding member of CAQH — an alliance of health plans and trade associations that work to simplify healthcare administration.

In 2003, Aetna and the American Dental Association (ADA) announced a class-action settlement by dentists who accused Aetna of interfering with dental procedures to cut costs and forcing dentists to comply with excessive paperwork. The settlement called for Aetna to pay $4 million to 40,000 to 50,000 dentists and $1 million to the ADA Foundation, a charitable group.^[23]

In 2003, Georgia Insurance Commissioner John W. Oxendine fined Aetna's Prudential Health Plan $100,000 for violating Georgia's prompt pay law by delaying claims payments. Aetna companies had been fined four previous times by Oxendine's office, in 2000 and again in 2002, for a total of $411,200.^[24]

In 2006, John Rowe ended his 65 months as CEO and executive chairman of Aetna; during his tenure, the former Harvard geriatrician earned $225,000 a day (including Sundays and holidays).^[25]

In 2007, the New Jersey Department of Banking and Insurance filed an administrative order levying a $9.5 million fine against Aetna for refusing to appropriately cover certain services provided by out-of-network providers--including emergency treatment--in violation of New Jersey rules and regulations. ^[26]

In 2007, Aetna chief medical officer Troy Brennan told the Aetna Investor Conference that, "The (U.S.) healthcare system is not timely." He cited "recent statistics from the Institution of Healthcare Improvement… that people are waiting an average of about 70 days to try to see a provider. And in many circumstances people initially diagnosed with cancer are waiting over a month, which is intolerable."^[27]

In 2008, Aetna CEO Ron Williams received $38.12 million in compensation - the highest annual compensation in the insurance sector and the 22nd-highest compensation of all American CEOs.^{[28] [29]}

In 2008, Aetna President Mark Bertolino received $7.86 million in compensation.^[30]

In 2008, Aetna began offering pet health insurance in Alabama, District of Columbia, Idaho, Iowa, Montana, North Dakota and Texas, with plans to quickly expand to all 50 states. “As the new underwriter for Pets Best policies, we look forward to working closely with Pets Best and the AVMA GHLIT to extend the reach of the pet insurance industry to bring trusted, affordable pet health insurance products to pet owners nationwide,” said Gretchen Spann, Aetna’s head of pet insurance.^[31]

[edit] 2009

In June, former Aetna employee Cornelius Allison of Darby, Pa., filed suit against Aetna in U.S. District Court in Pennsylvania after hackers gained access to a company Web site holding personal data for 450,000 current and former employees as well as job applicants. The suit charged Aetna with negligence, breach of contract, negligent misrepresentation and invasion of privacy. ^[32]

Through June 30, Aetna took in $14 billion in premiums: $10.7 billion of that amount from employers and employees, $2.9 billion more from Medicare recipients who bought a supplemental insurance plan to cover the gaps in what Medicare covers, and another $400 million for handling Medicaid claims. Aetna reported that it paid out $11.9 billion in health care reimbursements and $2.3 billion in administrative expenses (20 percent).^[33]

On September 22, more than 200 people gathered in front of Aetna's Hartford headquarters to call for a public health insurance option they said is essential to true national health care reform. The insurance industry, including Aetna, has opposed a public option.^[34]

On October 2, Connecticut Attorney General Richard Blumenthal and Healthcare Advocate Kevin P. Lembo asked Aetna and four other insurance companies for information the companies may have sent policyholders regarding the impact of proposed legislation on Medicare Advantage and prescription drug programs. According to Blumenthal, some insurance companies have exaggerated or stretched the impact of health care reform.^[35]

On October 30, Aetna reported a third quarter profit increase of 18 percent.^[36]

In November, the Arizona Department of Insurance fined Aetna Life Insurance Company and Aetna Health, Inc. after examination of their practices exposed multiple violations of Arizona insurance laws. The department found that Aetna violated significant state laws governing important areas of health insurance operations, including Aetna's: failure to provide policyholders with information about their rights on appeals of medical claims or services denials; failure to acknowledge receipt of policyholder appeals; failure to notify policyholders about appeal decisions/outcomes; and, in some appeals involving the denial of services for potentially life threatening conditions, failure to inform policyholders of their decision within the required, expedited time frames.^[37]

On November 3, US Senator Tom Harkin, chairman of the Committee on Health, Education, Labor and Pensions, launched an investigation into health insurance pricing, asking Aetna and three other major insurers to justify their pricing practices. The investigation began after small business owners testified before Harkin's committee that skyrocketing health care premiums were severely hurting their livelihoods.^[38]

On November 19, Aetna announced the layoff off some 3.5% of its work force -- 625 employees now and a similar number of reductions early next year. The current cuts include 160 jobs in Connecticut.^[39][40] "Streamlining our business now will enable us to improve our competitiveness and redirect resources to areas with a greater potential for future growth," said Aetna CEO Ron Williams.^[41] During the third quarter of 2009, Aetna earned $326.2 million, or 73 cents per share. That represents an increase from $277.3 million, or 58 cents per share, in the same quarter last year.^[42]

[edit] Life insurance policies on slaves

In 2000 Deadria Farmer-Paellmann, head of the nonprofit Restitution Study Group of Hoboken, New Jersey, disclosed that from approximately 1853 to approximately 1860 Aetna had issued life insurance policies to slaveowners covering the lives of their slaves.

Aetna acknowledged that concrete evidence exists for Aetna issuing coverage for the lives of slaves and released a public apology.

The US Department of Commerce has determined that in modern US dollars - calculated for inflation and interest - slavery generated trillions of dollars for the US economy. ^[43] In 2002, Farmer-Paellmann brought suit against Aetna and two other companies in federal court asking for reparations for the descendants of slaves. The lawsuit said Aetna, CSX and Fleet were "unjustly enriched" by "a system that enslaved, tortured, starved and exploited human beings." It argued that African-Americans are still suffering the effects of 2 1/2 centuries of enslavement followed by more than a century of institutionalized racism. The complaint blamed slavery for present-day disparities between blacks and whites in income, education, literacy, health, life expectancy and crime.^[44]

This suit was denied, and the denial largely upheld on appeal.

In 2006, Farmer-Paellmann announced a nationwide boycott of Aetna over the issue of reparations for its policies covering slaves. Aetna stated that its commitment to diversity in the workplace and its investment of over 36 million dollars in such areas as education, health, economic development, community partnerships, and minority-owned business initiatives in the African-American community is more effective at aiding descendants of slaves and African-Americans in general than making restitutions for Aetna's life insurance policies on slaves.^{[45][46][47][48][49][50]}

[edit] See also

• Drivotrainer
• Health care reform in the United States
• Health insurance
• Life insurance
• Managed health care
• Medicare Advantage
• Pet insurance
• Public health insurance option
• Reparations for slavery

[edit] References

[edit] External links

• Pets Best Insurance
• Quality report cards Aetna plan HEDIS reports
• Restitution Study Group