Aetna 2011 Annual Report Download - page 10

Annual Report- Page 4
In 2011, 2010 and 2009, we repurchased approximately 45 million, 52 million and 29 million shares of our common
stock at a cost of approximately $1.8 billion, $1.6 billion and $773 million, respectively, under share repurchase
programs authorized by Aetna's Board of Directors (our “Board”).
We have contributed to our tax-qualified noncontributory defined benefit pension plan (the “Aetna Pension Plan”)
in each of the past three years. During 2011, 2010 and 2009, we made voluntary cash contributions of $60 million,
$505 million, and $45 million, respectively. We do not have any required contribution in 2012, although we may
voluntarily contribute approximately $60 million to the Aetna Pension Plan in 2012.
Voluntary Early Retirement Program
In July 2011, we announced a voluntary early retirement program. In connection with the voluntary early
retirement program, we recorded a one-time charge for enhanced severance and benefits of $89 million ($137
million pretax) in the third quarter of 2011.
Medicare Update
On June 13, 2011, the Centers for Medicare & Medicaid Services (“CMS”) lifted the intermediate sanctions it had
previously imposed on us that required us to suspend the enrollment of and marketing to new members of all Aetna
Medicare Advantage and Standalone Prescription Drug Plan (“PDP”) contracts. We have resumed marketing our
Medicare Advantage and PDP products and have been enrolling beneficiaries with effective dates on and after July
1, 2011. CMS still is not assigning any new low income subsidy members to our PDPs at this time. However, low
income subsidy members can make their own choice to enroll in Aetna products. As a result of these sanctions, our
2011 Medicare membership and operating results were adversely affected because we did not participate in the
annual enrollment process for 2011. We continue to cooperate fully with CMS to address residual matters identified
in connection with the sanction review.
Board of Directors Update
Fernando Aguirre was appointed to our Board in July 2011, for a term that will run until our 2012 Annual Meeting
of Shareholders. Mr. Aguirre is Chairman and Chief Executive Officer of Chiquita Brands International, Inc. He
also serves on our Board's Audit Committee and Medical Affairs Committee. With the addition of Mr. Aguirre, our
Board consists of thirteen directors.
Management Update
On February 25, 2011, the Board elected Mark T. Bertolini Chairman of the Board and Chairman of the Board’s
Executive Committee, each effective April 8, 2011, upon the retirement of Ronald A. Williams, our previous
executive Chairman.
Health Care Reform Legislation
In March 2010, President Obama signed into law the Patient Protection and Affordable Care Act and the Health
Care and Education Reconciliation Act of 2010 (collectively, “Health Care Reform”), which makes broad-based
changes to the U.S. health care system which could significantly affect the U.S. economy and has and will
significantly impact our business operations and financial results, including our pricing and medical benefit
ratios. Health Care Reform presents us with new business opportunities, but also with new financial and other
challenges. It is reasonably possible that Health Care Reform, in the aggregate, could have a material adverse effect
on our business operations and financial results.
Components of the legislation will be phased in over the next six years. We are dedicating and will continue to be
required to dedicate material resources and incur material expenses during that time to implement and comply with
Health Care Reform as well as state level health care reform. While the federal government has issued a number of
regulations implementing Health Care Reform, many significant parts of the legislation, including health insurance
exchanges ("Insurance Exchanges"), premium rate review, the scope of "essential health benefits", employer
penalties and the implementation of minimum medical loss ratios (“MLRs”), require further guidance and
clarification at the federal level and/or in the form of regulations and actions by state legislatures to implement the
law. As a result, many of the impacts of Health Care Reform will not be known for several years. Pending efforts