There's been lots of talk about the problem of growing income inequality in the U.S. but not much action in the healthcare industry. Last week, Aetna announced it would raise its employees' minimum wage to $16 an hour and improve their health benefits. But Aetna's insurance competitors have no plans to follow its lead.
Starting in April, all Aetna employees will earn at least $16 an hour, or about $33,000 a year for full-time workers. Approximately 5,700 Aetna employees, most of whom work in customer service or other administrative roles, will see a pay raise amounting to an average of 11% and as much as 33% for some employees. Also, more than 7,000 employees will be eligible for lower out-of-pocket healthcare costs, but they must meet certain income levels and agree to participate in wellness programs.
Aetna CEO Mark Bertolini said at last week's J.P. Morgan Healthcare Conference in San Francisco that he discovered many of his company's employees relied on food stamps or had children insured through Medicaid—despite working at one of the most profitable companies in the country. “That's really about inspiring our employees and paying it forward,” said Bertolini, who earned $30.7 million in 2013, including stock options and awards.
For Aetna, the move represents a relatively small investment that will cost about $25 million next year. But Bertolini said it can at least partially defray the $120 million in turnover costs that Aetna absorbs every year.
Aetna's peers aren't buying into the minimum-wage strategy. Anthem CEO Joseph Swedish said there have not been many conversations about the issue because the company believes its wages are in line with market rates. He did not say if Anthem had a company-set minimum wage. “We've continually focused on providing competitive wages,” Swedish said. “I can't speak to how (Aetna) calibrates their wage structure. But I feel very good about our wage compensation and benefit plan we offer to associates.”