Humana to cut jobs because of declining enrollment

LOUISVILLE — The insurer Humana said Wednesday it will cut about 2,500 positions out of 28,200 nationwide as it adjusts to smaller enrollment.

Humana's Medicare enrollment slid 24 percent last year to 3.4 million people, and its commercial enrollment fell 6 percent to roughly the same amount.

The Louisville-based company, however, said it will add 1,100 positions in growth areas including medical-cost containment and pharmacy management. State and Louisville officials say they will try to land as many of those positions as possible.

About 10,000 of the company's jobs are in Louisville now.

Lexington, which has fewer than 100 Humana workers, will continue to have the same number, according to the company.

"We do not expect a change in our employment in Lexington this year," company spokesman Jim Turner said via e-mail. "In Louisville, we expect a net work-force reduction of 750 positions, ... meaning we would end the year at 9,250 in Louisville."

Turner said as many as possible staff cuts "will be achieved through attrition, though it's too early to say what percentage."

The net loss of 1,400 jobs amounts to 5 percent of Humana's work force. The reductions also will come from outsourcing and job eliminations.

Humana said the changes would not affect its 2010 earnings guidance of $5.15 to $5.35 a 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 10.3 million people insured.

Humana sells commercial insurance and Medicare Advantage plans, administers Medicaid coverage and provides coverage through the military's Tricare program.

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 to 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 in the past several quarters as they struggled during the recession with enrollment losses in their employer-based plans as companies cut jobs.

Aetna Inc. has cut 1,250 jobs since November. WellPoint Inc. and Cigna Corp. have cut more than 1,000 jobs.

Humana said the work-force reduction will help it create "a more efficient, agile infrastructure" while giving it resources to invest in growth opportunities.

Humana earned $250.7 million, or $1.48 a 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, and other higher expenses.

Chief operating officer Jim Murray said earlier this month that Humana was "stepping back and reorganizing our commercial business."