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Aetna plans to give raises to 10,000 Humana workers after deal

by Melissa Mittelman

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(Bloomberg) — Aetna Inc. (NYSE:AET) plans to give raises to thousands of low-wage Humana Inc. (NYSE:HUM) employees as part of its acquisition of its smaller health-insurance rival.

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Pay for about 10,000 Humana employees will be lifted to $16 an hour after the deal closes, Aetna CEO Mark Bertolini said in written testimony submitted for a U.S. Senate subcommittee hearing Tuesday. That’s in line with wage minimums Bertolini set for U.S. workers at Aetna earlier this year. Next year, the company plans to cover a larger share of workers’ health care costs, based on income, Bertolini said, helping some save as much as $4,000 a year.

While the $16 minimum wage will benefit employees’ pocketbooks, Bertolini said he thinks it will also boost morale and keep workers from leaving. “Our hope is these initiatives will help reduce employee turnover.”

Aetna began paying all its low-wage U.S. workers at least $16 an hour in April, which benefited about 5,700 people and in some cases increased wages by a third, Bertolini said.

Assuming another insurance industry deal between Anthem Inc. (NYSE:ANTM) and Cigna Corp. (NYSE:CI) goes through, Aetna’s $35 billion acquisition of Humana would leave the United States with three major publicly traded health insurers, down from five. The deals will be closely scrutinized by antitrust regulators, and Bertolini said in his testimony that he plans to work with the U.S. government to address concerns during review. Those mergers are the subject of Tuesday’s Senate hearing in Washington.

Aetna joins a number of companies across the U.S. that compensate employees above the required federal minimum wage of $7.25 an hour.

A $16 hourly wage means an annual income of $33,280 for a full-time employee working 40 hours a week, 52 weeks a year, compared with $15,080 at the federal minimum wage.

—With assistance from Zachary Tracer in New York.