8-K

 1

                SECURITIES AND EXCHANGE COMMISSION

                       Washington, D.C.  20549

                             Form 8-K

          Current Report Pursuant to Section 13 or 15(d)
               of the Securities Exchange Act of 1934



Date of report (Date of earliest event reported)    March 30, 1996   
                                                 ____________________


                    Aetna Life and Casualty Company                    
_______________________________________________________________________
         (Exact name of registrant as specified in its charter)


                              Connecticut                              
_______________________________________________________________________
            (State or other jurisdiction of incorporation)


       1-5704                                     06-0843808           
_______________________________________________________________________
(Commission File Number)                      (I.R.S. Employer 
                                               Identification No.)


151 Farmington Avenue, Hartford, Connecticut           06156           
_______________________________________________________________________
(Address of principal executive offices)             (ZIP Code)


Registrant's telephone number, including area code     (860) 273-0123  
                                                     __________________


                             Not Applicable                            
_______________________________________________________________________
      (Former Name or Former Address, if Changed Since Last Report)



 2

                             TABLE OF CONTENTS
                             _________________


                                                           Page
                                                           ____

Item 5.  Other Events.                                       3


Item 7(c).  Exhibits.                                        5


Signatures                                                   6



 3

Item 5. Other Events.

Aetna Life and Casualty Company (Aetna) and U.S. Healthcare, Inc. 
(U.S. Healthcare) entered into a definitive agreement, dated March 
30, 1996, pursuant to which they have agreed to merge in a 
transaction valued at $8.9 billion.  The merger agreement, which 
has been approved by the board of directors of each company, calls 
for the formation of a new holding company, Aetna Inc., domiciled 
in Connecticut.  U.S. Healthcare shareholders will receive $34.20 
in cash, 0.2246 shares of Aetna Inc. common stock, and 0.0749 
shares of Aetna Inc. mandatorily convertible preferred stock for 
each share of U.S. Healthcare.  Each share of Aetna stock will 
become a share of Aetna Inc. stock.  The combined company will be 
78 percent owned by Aetna shareholders and 22 percent owned by 
U.S. Healthcare shareholders.

The merger will be financed with a combination of $5.3 billion in 
cash, the issuance of $2.7 billion of new Aetna Inc. common stock, 
and $0.9 billion in preferred securities.  The Aetna and U.S. 
Healthcare health businesses will be in wholly owned subsidiaries 
of Aetna Inc., with each subsidiary maintaining its current name.  
Aetna Chairman Ronald E. Compton will be chairman and CEO of the 
new company.  U.S. Healthcare Chairman Leonard Abramson will join 
Aetna's board of directors and will serve as a strategic 
consultant to Compton.  Two additional directors nominated by 
Abramson also will be named to the Aetna Inc. board.  The 
agreement is subject to approval by the shareholders of both 
companies and federal and state regulators, the close of the 
previously announced sale of Aetna's property/casualty unit to 
Travelers Group, and other customary conditions. It is expected to 
close in the third quarter of 1996. Abramson, who is the 
controlling shareholder of U.S. Healthcare, has agreed to vote in 
favor of the merger.  A copy of the press release announcing the 
merger agreement is attached hereto as Exhibit 99.1, which exhibit 
is incorporated herein by reference.

The Private Securities Litigation Reform Act of 1995 (the "Act") 
provides a "safe harbor" for forward-looking statements to 
encourage companies to provide prospective information about their 
companies, so long as those statements are identified as forward-
looking and are accompanied by meaningful cautionary statements 
identifying important factors that could cause actual results to 
differ materially from those discussed in the statement.  Aetna 
desires to take advantage of the "safe harbor" provisions with 
respect to statements it may make concerning the merger.  The 
following important factors, among others, could affect the 
successful integration of the companies and the recognition of 
increased earnings or other synergies from the transaction, as 
well as the combined company's continuing health operations:

Factors specific to transaction:

  - Successful offering of U.S. Healthcare managed care products 
to existing Aetna corporate customers and cross-selling of Aetna 
group life, specialty health and other products through U.S. 
Healthcare's existing network.

  - Timely integration of U.S. Healthcare management and 
information systems with those of Aetna.

  - Timely elimination of redundant administrative expenses.

 4

Other factors affecting combined company's health operations: 

  - Increase in Aetna debt relative to total capital resulting 
from the merger transaction.

  - Achievement of revenue enhancements and medical cost 
reductions. 

  - Success in managing health care costs and operating expenses, 
as well as quality of services provided, as affected by 
competition in managed care products, changes in health care 
practices, inflation, changing medical technologies, and changes 
in federal or state laws.

  - Adverse changes in federal or state laws, including: (i) 
various proposals to reform the federal Medicare program, (ii) 
limitations on premium levels, (iii) increases in minimum capital 
and reserve and other financial viability requirements, (iv) 
prohibition or limitation of capitated arrangements or provider 
financial incentives, (v) benefit mandates (including mandatory 
length of stay and emergency room coverage), (vi) regulatory 
limitations on the ability to manage care and utilization, (vii) 
any willing provider or pharmacy laws, and (viii) government 
imposed surcharges, taxes or assessments.

  - Adverse actions of governmental payers, including unilateral 
reduction of Medicare and Medicaid premiums payable to Aetna and 
U.S. Healthcare and discontinuance or limitations on 
governmentally-funded programs.

  - Inability to increase premiums or prospective or retroactive 
reductions to premium rates for federal employees apace with 
increases in medical costs due to competition, government 
regulation or other factors.

  - Termination of provider contracts or renegotiation at less 
cost-effective rates or terms of payment.

  - Price increases in pharmaceuticals, durable medical equipment 
and other covered items.

  - Denial of accreditation by independent quality accrediting 
agencies such as NCQA.

  - Selection by employers and individuals of higher 
copayment/deductible/coinsurance plans with relatively lower 
premiums.

  - Migration of employers from insured to self-funded coverage 
resulting in reduced margins.

  - Impact on medical loss ratio of greater net enrollment in 
higher medical loss ratio lines of business such as Medicare and 
Medicaid.

Additional Information regarding U.S. Healthcare:

Additional information regarding U.S. Healthcare is contained in 
its Form 10-K and other reports filed with the Securities and 
Exchange Commission.

 5

Item 7(c). Exhibits.

Exhibit 99.1 -- Press Release of Aetna Life and Casualty Company 
dated April 1, 1996.


 6

                       SIGNATURES

Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.






                                 Aetna Life and Casualty Company
                                 _______________________________
                                           (Registrant)


Date  April 1, 1996              By /s/ Robert J. Price         
                                    ____________________________
                                      (Signature)

                                      Robert J. Price
                                      Vice President and 
                                      Corporate Controller
                                      (Chief Accounting Officer)

EX-99

 1                                        Exhibit 99.1

                AETNA AND U.S. HEALTHCARE AGREE TO MERGE
                  ___________________________________

                  $8.9 Billion Transaction Will Create

              Nation's Leading Health Care Benefits Company
                    ________________________________

HARTFORD, CT. AND BLUE BELL, PA., APRIL 1, 1996 -- Aetna (NYSE: 
AET) and U.S. Healthcare (NASDAQ:USHC), two of the nation's 
leading health care companies, today announced that they have 
agreed to merge in a transaction valued at $8.9 billion.  The 
combined enterprise will have a unique ability to provide high 
quality health care services at a reasonable cost on a national 
scale, meeting the needs of consumers and employers large and 
small, and generating significant growth opportunities.

Together, the two companies provide health care services to 23 
million people, or one in every 12 Americans, and will be the 
leading provider of managed health care services with 10.3 million 
managed care members.  The combined company will offer a full 
spectrum of products, including behavioral health, vision care, 
dental, APM (pharmacy), and group life and disability insurance.

The merger agreement, which has been approved by the board of 
directors of each company, calls for the formation of a new 
holding company, Aetna Inc., domiciled in Connecticut.  U.S. 
Healthcare shareholders will receive $34.20 in cash, 0.2246 shares 
of Aetna Inc. common stock, and 0.0749 shares of Aetna Inc. 
mandatorily convertible preferred stock for each share of U.S. 
Healthcare.  At the March 29 closing price of $75.50 for Aetna, 
that represents a value of approximately $57 for each U.S. 
Healthcare share, a 24 percent premium over Friday's U.S. 
Healthcare closing price of $45.88.  Each share of Aetna stock 
will become a share of Aetna Inc. stock.  The combined company 
will be 78 percent owned by Aetna shareholders and 22 percent 
owned by U.S. Healthcare shareholders.

The merger will be financed with a combination of $5.3 billion in 
cash, the issuance of $2.7 billion of new Aetna Inc. common stock, 
and $0.9 billion in preferred securities.

The Aetna and U.S. Healthcare health businesses will be in wholly 
owned subsidiaries of Aetna Inc., with each subsidiary maintaining 
its current name.  Aetna Chairman Ronald E. Compton will be 
chairman and CEO of the new company.  U.S. Healthcare Chairman 
Leonard Abramson will join Aetna's board of directors and will 
serve as a strategic consultant to Compton.  Two additional 
directors nominated by Abramson also will be named to the Aetna 
Inc. board.

                                                Exhibit 99.1
                                                (continued)
 2

The agreement is subject to approval by the shareholders of both 
companies and federal and state regulators, the close of the 
previously announced sale of Aetna's property/casualty unit to 
Travelers Group, and other customary conditions.  It is expected 
to close in the third quarter of 1996.  Abramson, who is the 
controlling shareholder of U.S. Healthcare, has agreed to vote in 
favor of the merger.

Compton said, "This merger is a major step in our strategic 
plan to create an outstanding national health care company 
which meets customers' needs for high quality health care 
services at a reasonable cost.  It is an excellent strategic 
fit, and establishes a strong platform for growth, product 
innovation, superior financial performance and excellent 
long-term value for shareholders.

"Aetna is already one of the leading national health care 
companies, with a strong national brand name and a wide 
variety of health care products, serving a large number of 
Fortune 1000 companies.  U.S. Healthcare is widely 
recognized as the best-managed HMO company, with high 
customer satisfaction and acknowledged strengths in medical 
quality and cost management, retail marketing and 
information systems.  Combining these strengths, the new 
enterprise will be positioned to grow rapidly by offering 
customers a wide variety of products and services on a 
national scale,"  Compton said.

Abramson said, "As a leading provider of premier quality 
health care services,  U.S. Healthcare has achieved an 
enviable level of customer satisfaction.  We are 
successfully expanding our membership in key geographic 
markets.  By merging our premier managed care capabilities 
with Aetna's ability to manage large, multi-site plan 
sponsors with complex servicing needs, we can create this 
country's leading national health care company.

"Our focus will continue to be on the health of our members.  
We intend to set the standard against which all health care 
companies will be measured in terms of quality of health 
care delivered, the choice of health care plans and 
providers, and service to members.  We will maintain our 
leadership position in providing customers with the health 
information and health care services they need to live 
healthier and more fulfilling lives,"  Abramson said.

The new company expects to realize from synergies an 
additional $300 million after taxes from the combined health 
businesses within 18 months, including enhanced revenues 
through additional HMO membership and cross-selling 
opportunities with specialty health and group life, plus 
reductions in medical and operating expenses.

"We expect to be able to deliver substantial growth in 
earnings beyond 1997 when the effects of the synergies kick 
in," Compton said.


                                                Exhibit 99.1
                                                (continued)
 3

Consistent with its enhanced focus on growth, Aetna's board 
of directors intends to change the dividend policy to 
maintain a payout of 10 to 20 percent of operating earnings 
before goodwill amortization, upon completion of the 
transaction.

When the merger is complete, the combined health operations 
will be managed as one organization, with a management team 
drawn from both companies. Michael J. Cardillo and Joseph T. 
Sebastianelli, currently co-presidents of U.S. Healthcare, 
will be co-presidents of the combined health business, 
reporting to Compton.  They will maintain offices in both 
Blue Bell, PA and Middletown, CT.

James Dickerson, currently chief financial officer of U.S. 
Healthcare, will become chief financial officer of the 
combined health business, reporting to the co-presidents.  
Other key management appointments for the combined health 
care business include:

From Aetna:  Frolly M. Boyd, group life; A. Bruce Campbell, 
Healthways; Allen P. Maltz, Chief Actuary; Thomas J. 
McInerney, national accounts; Daniel S. Messina, deputy CFO; 
Scott A. Striegel, operations; John W. Trustman, information 
technology, and Thomas R. Williams, specialty health.

From U.S. Healthcare:  Arthur N. Leibowitz, M.D., chief 
medical officer; Timothy E. Nolan, sales; David F. Simon, 
general counsel, and Richard A. Wolfson, pharmacy.

"The combined health business will be led by the strongest 
management team in the industry today, representing the best 
of both organizations and possessing the skills and 
experience to successfully drive our business into the 
future," Compton said.

James W. McLane, CEO of Aetna Health Plans, announced that 
he plans to leave the Company soon, but will work with the 
integration team to help ensure a smooth transition, 
reporting to Compton.

Compton said, "I'm grateful to Jamie McLane for his efforts 
over the last five years in building AHP into one of the 
country's leading health care companies, with the 
significant position it enjoys today.  He is a strong 
proponent of the decision to merge our health business with 
U.S. Healthcare, and he will be instrumental in helping to 
achieve a rapid and effective integration process."

A team consisting of Cardillo, Aetna Vice Chairman Richard 
L. Huber, McInerney and Sebastianelli will plan for 
integration of the two companies' systems and workforces 
upon close of the transaction.  The combined company will 
remain committed to its two home regions, Connecticut and 
Pennsylvania.  Both regions will play an important role in 
the company's future.


                                                Exhibit 99.1
                                                (continued)
 4

"As we merge these two businesses, the integration team will 
work to streamline operations," Compton said.  "We will be 
sensitive to the interests of our employees and the 
communities where we live and work.  We will rely as much as 
possible on attrition, but some positions may be eliminated.  
We will give qualified employees preference for new jobs 
that are created as our business grows."

Combined Aetna/U.S. Healthcare health membership is 14.1 
million members comprised of 10.3 million managed care 
members and 3.8 million indemnity members.

Aetna is one of the country's largest insurance and 
financial services organizations, centered around three core 
businesses:  Aetna Health Plans, Aetna Retirement Services 
and Aetna International.  Aetna Health Plans is the 
country's third-largest health care company, reaching more 
than 20 million Americans.  Aetna Retirement Services 
markets a variety of retirement, investment and life 
insurance products to individuals, businesses and not-for-
profit institutions, serving 1.5 million customers directly 
and through nearly 20,000 plan sponsors.  Aetna 
International offers a variety of life insurance and 
financial services products and has more than 8.5 million 
customers in 10 countries.

U.S. Healthcare provides managed health care services 
through its HMOs in Pennsylvania, New Jersey, New York, 
Delaware, Connecticut, Massachusetts, New Hampshire, 
Maryland, Georgia, Virginia, Rhode Island, the District of 
Columbia, North Carolina and South Carolina.  The Company 
also provides a variety of other managed health care 
services to self-insured and other employers, including 
workers compensation managed care, coordination and 
administration of multiple health plans for multi-state 
employers and quality measurement and improvement programs 
and data analysis systems for providers and purchasers of 
health care.

                               ###

Shareholders of Aetna and U.S. Healthcare will be asked to 
approve the merger agreement and exchange of shares pursuant 
to a proxy statement/prospectus forming part of a 
registration statement to be filed with the Securities and 
Exchange Commission (the "SEC").  This press release does 
not constitute an offer or solicitation of an offer for 
securities or the solicitation of any approval by 
shareholders of U.S. Healthcare or Aetna.  For additional 
information regarding factors that may materially affect the 
acquisition, including estimated earnings, cost savings and 
improvements and revenue enhancements, please see Aetna's 
Form 8-K filed with the SEC today.

Additional information about the companies is available on 
the following Internet addresses:  www.aetna.com and 
www.ushc.com