Dive Brief:
- Rolling layoffs that Elevance Health quietly kicked off in September have continued into this year, according to a notice the health insurer filed with the state of Michigan last month.
- It’s not yet clear how many workers Elevance is laying off overall, but thousands of employees in multiple states have been let go to date, according to several sources familiar with the matter who spoke to Healthcare Dive. The sources, who requested anonymity to discuss sensitive matters, said the layoffs could be affecting as many as 10,000 employees or more.
- The layoffs are impacting multiple divisions of the company. Elevance did not respond to a request for comment.
Dive Insight:
Elevance, formerly known as Anthem, is one of the largest insurance companies in the U.S., serving 118 million customers across its various businesses. The insurer offers Blues-affiliated plans in 14 states, along with Medicare and Medicaid plans through a subsidiary called Wellpoint. Elevance also operates a health services division called Carelon.
The company employs nearly 100,000 people, but confirmed “adjustments” to resources last fall after employees began sharing they were laid off on social media.
Elevance has not responded to repeated requests to share the full scope of the reduction in force. Yet, it far outstrips the number of affected employees included in notices Elevance has filed with specific states to comply with the WARN Act, according to multiple sources that spoke with Healthcare Dive.
The WARN Act requires employers to disclose in advance impending layoffs if they meet certain conditions, but it has numerous gaps, said Michael Jones, a labor and employment lawyer at law firm Eckert Seamans. As a result, it’s possible for employers to lay off a significant percentage of their workforce without triggering the law’s disclosure requirements, Jones said.
Elevance filed its first WARN notice in California in October disclosing that 87 workers would be let go from its Woodland Hills office. One month later, the company filed a notice in Minnesota sharing that 57 workers would be let go in Mendota Heights.
Elevance filed the latest WARN notice in Michigan on Jan. 31. According to the document, 90 employees at the insurer’s Dearborn office will lose their jobs in March.
The Indianapolis-based company has characterized the layoffs as necessary to reposition the company in the face of “recent challenges” in the healthcare industry. Elevance didn’t share specific challenges, but insurers have scrambled to tamp down rising medical costs since last year. Government efforts to curb overpayments and runaway quality ratings in the lucrative Medicare Advantage program are expected to cut into insurers’ profits. And payers that participate in Medicaid are experiencing significant turbulence as states recheck beneficiaries’ eligibility for the safety-net program.
Yet, Elevance’s revenue and profit have both risen over the past year. The company in January reported almost $6 billion in profit on revenue of $171 billion — up more than 2% and 9% respectively from 2022, stronger growth than Wall Street expected.
Elevance said it expects profits will grow further this year in a recent earnings report. The company expects to bring in earnings per diluted share of at least $34.29 in 2024, representing a 36% increase from 2023.
On the January call with investors to discuss its financial results, Elevance CEO Gail Boudreaux said the expected rise in earnings is thanks in part to “business optimization” efforts.
The insurer recorded a business optimization charge of $719 million in 2023, up from $39 million in 2022.
Elevance has yet to file an annual report for 2023 with the Securities and Exchange Commission breaking down that amount, but business optimization charges can include employee termination costs. The brunt of the charge was recorded in the third quarter, when layoffs began.
Elevance is not the only major insurer that’s undergone recent layoffs. CVS Health said in August it planned to lay off 5,000 employees. One month later Centene said it would let go 2,000 workers. And days before posting its own fourth-quarter earnings in January, Humana confirmed it would have a “limited” number of layoffs affecting a “small percentage” of its workforce.
Clarification: This story has been updated with details on Elevance’s customers served.
