WellPoint becomes latest insurer to cut staff

The Indianapolis-based BlueCross BlueShield plan operator cited the decline in employment as a reason to cut operating expenses.

By Emily Berry — Posted Feb. 11, 2009

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The country's largest health plan by membership became the latest among the national health plans to cut its work force.

WellPoint, based in Indianapolis, announced Jan. 16 it would eliminate 1,500 positions, 900 of which were vacant.

The 1,500 positions eliminated would be about 3.5% of its 42,000 employees.

WellPoint claims 35 million members, most covered by for-profit Blues plans in 14 states.

In discussions with investment analysts a few weeks after the layoffs, WellPoint President and Chief Executive Officer Angela Braly said the company expected an average 10% unemployment rate in the states where it operates in 2009.

WellPoint is not the only plan cutting staff.

Minnetonka, Minn.-based UnitedHealth Group, WellPoint's closest competitor in number of covered lives, eliminated 4,000 jobs in 2008.

Aetna announced 1,000 layoffs -- less than 3% of its work force -- in December 2008, and Cigna announced in January it would cut 4% of its work force, or about 1,100 jobs.

Nonprofits have also announced work force reductions, including in Michigan, where the state's BlueCross BlueShield plan said it would eliminate as many as 1,000 jobs -- more than 10% of its staff -- this year.

As her counterparts did in announcing their own staff reductions, Braly insisted layoffs wouldn't affect service.

"We remain committed to providing our members with the high-quality customer service they expect and developing innovative solutions to address the rising costs of health care."

David Welsh, MD, a general surgeon from Batesville, Ind., and president of the Indiana State Medical Assn., said it made sense that WellPoint would join other businesses in cutting costs.

"I think both myself and the rest of the association understand what everybody is going through right now with the economy, and certainly understand people tightening their belts," Dr. Welsh said.

He said he expected the insurer would keep improving its claims-handling systems, which have been the subject of two meetings between the medical society and WellPoint officials.

"I think we'll continue to have a good response working with them on these issues in spite of this," Dr. Welsh said.

A news release announcing the cuts also noted that staff who oversee compliance with Medicare Part D and Medicare Advantage plan regulations would not be laid off.

The Centers for Medicare & Medicaid Services in January ordered WellPoint to stop enrolling new members in its senior drug plans because of widespread problems reported among its enrollees, as well as ongoing violations and system failures the company had not corrected.

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