History of Aetna
Aetna has its origins in the Aetna Insurance Company, which was founded in the early 19th century in Hartford, Connecticut by Thomas K. Brace. The company initially dealt primarily in fire insurance. Mount Etna, the Italian volcano, inspired the name. In 1850, the company began offering life insurance policies and appointed Eliphalet Adams Bulkeley to head this new division. In 1853, the life insurance business was separated into a new corporation, named Aetna Life Insurance Company, with Bulkeley as its president. This is the forerunner of today’s Aetna Inc.
In 1857, an economic decline ran several insurance companies out of business. This eliminated many of Aetna’s competitors and left the company with a favorable market position. Four years later, Aetna introduced a new participating life insurance product that allowed policyholders to collect dividends. This unique product was very attractive to consumers and made the company more competitive.
The company also pursued an aggressive marketing strategy throughout the 1860s, when most of its competitors were taking a more conservative approach. The destruction caused by the Civil War left many consumers eager to purchase life insurance policies, and Aetna’s aggressive marketing was successful. The company’s business grew over 600 percent between 1861 and 1865. In 1868, Aetna revamped its business practices significantly.
One of its major reforms was to hire an actuary for the first time. Other reforms were consumer oriented, such as switching to an all-cash premium payment structure and beginning to pay dividends to policyholders after only one year, instead of the traditional five years. These changes were popular and successful, and by 1878, the company had increased its capitalization from $150,000 to $750,000.
Aetna sold its first accident insurance policy in 1891, thereby launching its expansion into other lines of insurance. The first accident insurance policy was sold to the company’s then-president, Morgan Bulkeley. Aetna began offering health insurance policies in 1899. Accident and health insurance policies were initially only offered to Aetna’s life insurance customers and were primarily intended only to promote the company’s life insurance sales.
Shortly thereafter, the company began offering liability coverage for employers. In 1902, the company created a new Accident and Liability department. By 1907, this was spun off into a separate corporation, Aetna Accident and Liability Company. This new company offered a variety of liability insurance policies, including damage to horse teams, automobile collisions, plate glass breakage and burglary insurance policies.
In 1913, the company began offering its first group coverage life insurance policies. At the time, most insurance companies did not offer any group plans. The company expanded its group coverage into other lines over the coming years, adding group accident policies in 1914, group disability policies in 1919 and group health care in 1936. Group health care would grow to be the central focus of the company’s business.
Aetna started offering major medical group coverage in 1951. At the time, the country was facing a labor shortage and a wage freeze. As a result, employers were interested in offering robust health care coverage as part of their employees’ compensation. This is the origin of today’s health care benefits plans, and Aetna was one of the first national insurance companies to enter this market.
The 1960s saw the company undergoing a substantial corporate restructuring. In 1967, a holding company called Aetna Life and Casualty Inc. was created to hold the stock in the Aetna Life Insurance Company and two affiliated businesses, Aetna Casualty and Surety Company and Standard Fire Insurance Company. The company was listed on the New York Stock Exchange for the first time in 1968.
Aetna also began international expansion in the 60s. At the start of the decade, Aetna bought the Canadian Excelsior Life Insurance Company, and in 1968, it acquired a majority interest in the Australian Producers and Citizens Cooperative Assurance Company.
The company underwent another major change in the 1990s. In 1990, the company discontinued individual health insurance policies. Then in 1996, Aetna sold its property and casualty insurance operations to Travelers Insurance Group, which allowed the company to focus exclusively on group plans.
In 1991, Aetna reorganized into new strategic business units. It merged with U.S. Healthcare in 1996 and started doing business as a health and financial services company. The new company pursued several acquisitions, beginning with NYLCare Health Plans in 1998, which added 2.2 million members, followed by Prudential HealthCare. This brought Aetna’s total number of members to over 21 million, making it the largest provider of health benefits in the U.S.
In the 2000s, Aetna sold its financial services and international holdings off to other investors and began acquiring other health management assets. These acquisitions include Strategic Resource Company, which administers group benefits for part-time and temporary workers; ActiveHealth Management, a healthcare data analytics firm; HMS, a regional healthcare network operating primarily in Michigan and Colorado; and Schaller Anderson, an administrator of Medicaid healthcare service plans.
Like most health insurance providers, Aetna was strongly opposed to the inclusion of a public option in the Patient Protection and Affordable Care Act (ACA). As a result, the company was a target of protests by public health care advocates in 2009. In 2011, Aetna acquired two additional holdings: Medicity, a health information technology firm, and Prodigy Health Group, an administrator of self-funded health plans. Aetna also acquired Coventry Health Care Inc. in 2013.
Aetna is now the third-largest healthcare benefits provider in the United States, with 22 million members. Aetna has recently resumed offering individual health care plans in certain states. These plans are available for purchase via these states’ government health care exchange websites, as required by the ACA.