Costco, the well-known warehouse chain store in the United States, has always been popular among consumers for its affordable and quality products. In addition to selling everyday goods, Costco also offers high-value travel packages and gas station services. Now, this retail giant is gearing up to enter a huge new market: Medicare, the federal health insurance program.
According to The Wall Street Journal, Costco is planning to collaborate with the non-profit healthcare organization SCAN Group to introduce limited Costco-branded Medicare plans. Costco and SCAN have announced that they will first introduce the jointly named “Red-Blue Card Advantage Plan” Medicare Advantage products in two states and offer the Red-Blue Card Supplement Plan in a third state.
The two parties stated that these three target markets have approximately 5 million Red-Blue cardholders, but they have not disclosed the exact locations or timing of the plan launch yet, citing the need for approval from Medicare regulatory authorities, which restricts information disclosure.
Costco has been exploring new ways to increase sales and add value to its membership for consumers, including gradually expanding its independent gas station business. It is widely known that filling up at Costco is cost-effective, leading to scenes of long queues and sometimes waiting for over an hour just to get gas.
In addition to gas stations, Costco has partnered with more services, including the popular vacation travel package service. Costco Travel allows members to book international vacation trips, cruises, and car rentals at discounted prices, often lower than traditional travel agencies. The collaboration with SCAN will enable Costco to venture into the Red-Blue card business.
SCAN, headquartered in Long Beach, California, focuses on the Red-Blue card business with approximately 560,000 members in Southern California being its core market. SCAN also offers the Red-Blue Card Advantage Plan in Arizona, Nevada, New Mexico, Texas, and Washington.
Sachin Jain, CEO of SCAN, stated that the newly launched Red-Blue Card Advantage Plan will integrate closely with the services Costco provides in prescription drugs, vision products, over-the-counter drugs, food, and hearing products.
“We are working to create a product that is extremely convenient and user-friendly, enabling consumers to smoothly enjoy their benefits,” he said.
Richard Stephens, Senior Vice President of Costco’s pharmacy business, noted that some elderly individuals often face difficulties at pharmacy counters due to insurance reimbursement issues. Costco members trust that when they purchase a product from Costco, it has been thoroughly vetted and is considered the best in its category. This is why Costco decided to introduce Red-Blue card services.
This retail giant views this new healthcare collaboration as a pilot project. Stephens stated, “We plan to learn from this and ensure we provide appropriate products for our members.”
Due to federal regulations, purchasing Costco’s co-branded Red-Blue card plans does not grant Costco membership. These newly launched plans will be sold at Costco warehouses and through general channels such as insurance agents and websites.