Costco expands into Medicare Advantage with SCAN partnership
Costco is broadening its healthcare push with plans to launch a Costco-branded Medicare Advantage product for older Americans. The offering is expected to begin in two states, while a separate Medigap plan is also being developed for a third state.
Highlights
- Costco is entering the Medicare Advantage market via a partnership with SCAN Group, initially launching in two states and planning a Medigap product for a third.
- The initiative adds a new healthcare revenue stream for Costco, diversifying beyond its core warehouse business amid ongoing pharmacy and hearing aid offerings.
- Costco shares recorded a slight gain following the Medicare Advantage announcement, outperforming a broader market downturn.
Healthcare expansion through insurer tie-up
As first reported by CNBC, Costco is entering Medicare Advantage in partnership with SCAN Group, a not-for-profit health insurer, extending a relationship that already includes pharmacy services for SCAN members.Dr. Sachin Jain, chief executive of SCAN Group, says the initial launch of the planned Medicare Advantage product is expected in two states. He also says a Medigap plan, which helps cover out-of-pocket Medicare costs, is in the works for a third state.
The move builds on last year's arrangement under which SCAN named Costco a preferred pharmacy for its Medicare Advantage members. Jain says the partnership aims to redesign the Medicare Advantage experience by drawing on Costco's reputation for value-focused offerings to members.
Competitive and revenue implications
The expansion places Costco into a Medicare Advantage market where major insurers such as Humana and UnitedHealth are still pursuing growth, even as some players pull back because of higher costs and regulatory changes.For Costco, the initiative adds another healthcare-related service alongside its pharmacy and hearing aid businesses and could help attract additional members. While the financial contribution of the venture remains uncertain, it opens a new potential revenue stream beyond the company's warehouse membership model.
Costco shares are showing resilience with a slight gain as the announcement unfolds, outperforming a broader market decline.
Kinsale Insurance Company’s rating upgrade highlighted how the insurer has strengthened its position in the U.S. excess and surplus lines market through scale, disciplined underwriting, and robust capitalization. Our earlier coverage noted that sustained profitability and balance-sheet strength were key factors supporting improved credit assessments and stable outlooks, underscoring how financial resilience can shape growth opportunities in competitive insurance markets.
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