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Starbucks move furthers private health insurance exchanges

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Starbucks Corp. is the latest major employer to move health care coverage for its employees to a private exchange as exchange growth continues, though at a slower rate than earlier projections.

Seattle-based Starbucks said Monday that it has signed with Aon Hewitt's Aon Active Health Exchange to offer employee health coverage.

“Providing industry-leading benefits for eligible full- and part-time partners is a cornerstone of who we are as a company,” Ron Crawford, Starbucks' vice president of global benefits in Seattle, said in a statement Monday.

Depending on their location, Starbucks employees during fall enrollment that begins Aug. 1 can choose from plans offered by four to six insurers, up from one insurer currently offering coverage. The insurers will offer five health plan designs, up from the current three.

Insurers offering health coverage include Aetna Inc., Cigna Corp., Premera Blue Cross and UnitedHealthcare Inc.

“Eligible partners in the U.S. could save up to $800 annually by moving to a health insurance plan that better meets their individual needs. The potential savings are even more for partners who select family coverage, with the opportunity to save $2,600 annually,” Starbucks said in a statement.

Starbucks will move to the exchange effective Oct. 1. It did not disclose how much it would save or how many employees would be affected.

Starbucks joins other big well-known employers, including Sears Holding Corp., Starwood Hotels & Resorts Worldwide Inc., United Parcel Service Inc. and Walgreen Co. that have moved to private health insurance exchanges in recent years.

Still, private exchange growth has not happened as quickly as once projected.

For example, private exchange enrollment doubled in 2015 to 6 million people, according to Dublin-based Accenture P.L.C. While Accenture last year projected that enrollment would hit 12 million this year, actual enrollment in 2016 is about 8 million people, according to the consultant.

Exchange enrollment “has not taken off. There has not been a major shift in health care right now,” said Steve Zaharuk, a senior vice president at Moody's Investors Service Inc. in New York.

Still, Mr. Zaharuk said exchanges do have appeal for employers with high employee turnover and corporate sites in numerous locations, which he said “means a lot less hassle for employers.”

“We have had steady growth in our exchange,” said John Zern, CEO of Aon P.L.C.'s global health practice in Chicago.

Aon Hewitt earlier this year reported about 1.4 million employees, retirees and dependents were enrolled in the two exchanges it offers.

Willis Towers Watson P.L.C., which also operates a private exchange, said its business is growing, too.

“In the future, employers will explore and move to exchanges. We expect continued growth,” said Craig Jannino, private exchange leader at Willis Towers Watson in Boston.