A looming merger between insurance giants Aetna Inc. and Humana Inc. has worried two state Legislators who believe the deal could result in a large number of job losses for Milwaukee and Green Bay.
Louisville, Ken.-based Humana announced on July 3, 2015, that Hartford, Conn.-based Aetna would acquire all outstanding Humana shares with a combination of stock and cash worth $37 billion.
Written into the language of the merger contract is a clause to maintain Humana operations in Louisville. Humana has 3,800 employees in Wisconsin, including 3,100 located in Brown County. Most of the remaining 700 employees are located in the Milwaukee area.
There has been no guarantee from either company that those jobs will stay in the state once the merger is completed.
When asked if Humana anticipated layoffs in Wisconsin after the merger, Humana spokesperson Jeff Blunt responded: “It’s still too early in the transition process to answer that question. The companies remain independent and will continue to be until the transaction closes, which is expected to take place in the second half of this year.”
Aetna spokesperson Rohan Hutchings said: “As far as employment goes, we won’t be making decisions about jobs until after the transaction is closed.”
The deal must be approved by federal regulators before it can close and it is being reviewed by the U.S. Department of Justice to see if it would violate national antitrust regulations. The deal must also be approved by state insurance commissioners.
The merger needs approval from 20 states before it can move forward.
On March 28, State Sen. Dave Hansen (D-Green Bay) and State Rep. Eric Genrich (D-Green Bay) sent a joint letter to the Office of the Commissioner of Insurance asking commissioner Ted Nickel to demand Aetna and Humana guarantee “zero job losses in Humana’s Wisconsin locations should the proposed merger proceed.”
“Of paramount concern are the 3,100 individuals Humana, as the single largest private employer in Brown County, currently employs in Green Bay and De Pere,” the letter reads. “The potential economic impact of this merger is greater in northeast Wisconsin than in any other part of the state. The loss of Humana’s family-supporting jobs and charitable commitments to the community would be a devastating blow to greater Green Bay.”
The state congressmen also expressed concern over the merger’s potential impact on price competition in Wisconsin: “To ameliorate these concerns, we ask the OCI to work with Aetna and Humana to control drug prices and premiums for Wisconsin consumers and to maintain a competitive array of choices in providers.”
Adding to uncertainty regarding Humana jobs in Wisconsin, in January 2015 the insurance company lost a major account with Milwaukee Business Health Care Group, a coalition of around 1,000 businesses and 70,000 employees in southeastern Wisconsin. The group switched to United Health Care.
Humana’s loss of that contract may have resulted in fewer claims filed through its Wisconsin offices.
A public hearing regarding the merger was held on March 30. A representative from the Office of the Commissioner of Insurance was not immediately available for comment.
During the meeting OCI staff recommended the merger be approved without the conditions requested by Hansen and Genrich.
“There was no official decision made, but the staff of the OCI recommended approving the merger without conditions,” said Robert Kraig, executive director of Citizen Action Wisconsin, a Milwaukee-based liberal political action group.