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James C. Robinson From Managed Care To Consumer Health Insurance: The Fall And Rise Of Aetna Health Affairs, March/April 2004; 23(2): 43-55. [Abstract] [Full Text] [PDF] [Reprints & Permissions]

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Jamie Robinson's Aetna Analysis

Douglas J. Halbert   ( 22 March 2004 )

If They Had Listened to the Customer

Jeffery T Wack   ( 13 April 2004 )

The Cost Of Executive Compensation

Paul J. Erickson   ( 7 May 2004 )

Jamie Robinson's Aetna Analysis 22 March 2004
Douglas J. Halbert, Retired Formerly VP, Aetna Health Management Send comment to journal: Re: Jamie Robinson's Aetna Analysis djhs{at}aol.com Douglas J. Halbert	If James Robinson receives any criticism of his paper, then the persons complaining do not know what they are talking about. The presentation is, in my opinion, the best and most accurate analysis of the events that took place between 1990 and 2002. My career with the Aetna spanned the period from the mid-1950s to 1989. I chose to retire at that time because the handwriting was on the wall. Senior management commenced with the employment of physicians and other health care professionals in top level positions. These men and women had no concept of good business management or the theories of risk management, nor an understanding of Aetna's culture as a multiline insurance company. They had a twofold goal -- to gain control over their peers in the health care profession and make as much money for themselves as possible before the government was forced to take over health care financing entirely. Our 150 years of leadership in the insurance industry was totally destroyed. We are left today with only remnants of the company we so proudly spent our working life supporting. The casualty business is gone to the Travelers. The individual life insurance business is gone to Lincoln National. The financial management and pension business is gone to ING. The fact that the health benefits business is surviving is a credit to Dr. Rowe and his current management team. They have done an outstanding job of pulling Aetna away from the brink of disaster.
If They Had Listened to the Customer 13 April 2004
Jeffery T Wack, Adjunct Faculty in Health Marketing Yale University Send comment to journal: Re: If They Had Listened to the Customer JTWackCo.YaleU{at}snet.net Jeffery T Wack	In the few years leading up to the Aetna-U.S. Healthcare merger, I was contracted to do dozens of market research projects on behalf of several managed care organizations, including Aetna Health Plans' corporate group. These projects included several surveys and hundreds of personal interviews with benefits managers, providers, insurance brokers, and employees nationwide, but especially in the New Jersey-New York-Connecticut market where U.S. Healthcare had a budding presence. U.S. Healthcare’s model was despised by providers for its heavy-handedness, loathed by employees for its inflexibility, and resisted by midsize and larger companies, including Aetna's existing clients, for whom benefits were a key part of their talent attraction/retention packages. Whereas it may have been as the author says that the "conventional wisdom from Wall Street to the White House" was that a one-size-fits-all approach was the future, anyone spending time on Main Street knew it would never work, even if imposed by government fiat a la universal care. From the market’s perspective, Aetna adopting U.S. Healthcare's business model made no sense. The mystery is why it happened nonetheless. One suspects the answer is that the White House, and especially Wall Street and the firms' CEOs, were all talking among themselves, isolated from, or at least unresponsive to, their customers. Anyway, what was the downside for the principals? The merger didn’t work, but they still kept their millions.
The Cost Of Executive Compensation 7 May 2004
Paul J. Erickson, Atlanta Georgia Send comment to journal: Re: The Cost Of Executive Compensation vike_n_row{at}yahoo.com Paul J. Erickson	The article by James Robinson about Aetna was well written. But more should be said about executive compensation. Much credit can be given to Dr. Rowe, but at what cost? According to company proxy statements and 10-K forms filed with the U.S. Securities and Exchange Commission, Aetna's compensation is not as large as other traded health insurers, but should still be scrutinized for outlandish executive compensation amounts. According to *Managed Care Week* (May 3, 2004), the CEOs of most publicly traded managed care organizations (MCOs) clearly benefited in the pocketbooks from their firms' performance gains during 2003. As in the previous year, the majority of the cash compensation of most of the top-paid CEOs in the industry came in the form of bonuses, the figures show. Together, the 18 CEOs listed had total salaries of $16,572,488 and total bonuses of $32,654,347. William McGuire, M.D., CEO of UnitedHealth Group, narrowly topped Leonard Schaeffer, CEO of WellPoint Health Networks, Inc., for the first place in total salary plus bonus compensation for the third straight year. Other CEOs placing high in the rankings include John Rowe of Aetna, Larry Glasscock of Anthem Inc., H. Edward Hanway of CIGNA Corp., Anthony Marlon of Sierra Health Services, Inc., Howard Phanstiel of PacifiCare Health Systems, Inc., and Allen Wise of Coventry Health Care, Inc. How much executive compensation is too much? In our current debate about continuing health insurance cost inflation, these salaries are undoubtedly contributing to this excess. The boards of these above-mentioned companies--and Aetna is no exception--need to give rewards to executives who take the reins of their companies, but where's the real limit? There apparently does not seem to be one, and we should all be aware of these costly and excessive figures of excutive compensation. For-profit, publicly traded health insurance companies have their own accountability to stockholders, but also to policyholders, and other stakeholders who probably do not feel good about double-digit increases in their health insurance premiums for several years straight. Robinson could also have integrated comments like these in his article, but it was a good article indeed!