Tuesday, June 14, 2005
Costco to enter health insurance market
[Debora Vrana, "It's Insurance a la Cart: Costco Stores to Market Health Plans," The Los Angeles Times, 9 June 2005.]
Big discount retail chains such as Target have started to enter the health care market by offering care on-site, but Costco appears to be the first to enter the insurance industry:
Costco Wholesale Corp., the low-cost bulk supplier of breakfast cereal, motor oil and diamond rings, is adding health insurance to its warehouse shelves.
In a pilot program to be launched next month in Southern California, Costco will offer family and individual coverage to its customers who pay $100 a year for "executive" membership, company officials said. The insurance is aimed at people such as contractors, waiters and students who are self-employed or cannot sign up for plans at work.
Company officials would not quote premiums but said the insurance would be 5% to 20% cheaper than policies individuals could buy on their own. Costco expects to offer coverage statewide by the end of the year and may eventually make it available to regular members, said Dellanie Fragnoli, assistant vice president of insurance services at Issaquah, Wash.-based Costco.
The move, along with the entry of financial institutions into the health insurance market, provides further evidence that the old ways of doing things are no longer going to work. A new emphasis on reaching out to consumers and meeting them where they are is likely to place increasing competitive pressure on traditional insurance companies to adapt accordingly:
Although discount retailers selling health insurance may seem like an odd mix, it points out the need consumers have for alternatives, given the rising costs of health insurance, [J.D. Kleinke, a healthcare economist in Portland, Ore.] said.
Other major retailers including Target Corp. and Longs Drug Stores Corp. also have moved into the healthcare arena. At some Target stores in Minneapolis, shoppers can visit walk-up clinics staffed mostly by nurse practitioners for minor ailments, such as a bladder infection or seasonal allergies, with no appointment and little or no waiting. Target is contracting with Minneapolis-based MinuteClinic Inc. to run the clinics.
In Davis, Calif., this year, Longs unveiled its own in-store clinic. And also this year, the Wal-Mart Stores Inc.-operated Sam's Club began offering a discount program to members that cuts by as much as 50% the cost of some health services not covered by insurance, such as laser eye surgery and dental care.
This area is going to continue to grow, predict healthcare specialists like Kleinke, as rising costs push people to find new ways to insure themselves.
[Greg Scandlen, "Choice is revolutionizing health care," The Wichita Eagle, 28 September 2004.]
[Debora Vrana, "It's Insurance a la Cart: Costco Stores to Market Health Plans," The Los Angeles Times, 9 June 2005.]
Big discount retail chains such as Target have started to enter the health care market by offering care on-site, but Costco appears to be the first to enter the insurance industry:
Costco Wholesale Corp., the low-cost bulk supplier of breakfast cereal, motor oil and diamond rings, is adding health insurance to its warehouse shelves.
In a pilot program to be launched next month in Southern California, Costco will offer family and individual coverage to its customers who pay $100 a year for "executive" membership, company officials said. The insurance is aimed at people such as contractors, waiters and students who are self-employed or cannot sign up for plans at work.
Company officials would not quote premiums but said the insurance would be 5% to 20% cheaper than policies individuals could buy on their own. Costco expects to offer coverage statewide by the end of the year and may eventually make it available to regular members, said Dellanie Fragnoli, assistant vice president of insurance services at Issaquah, Wash.-based Costco.
The move, along with the entry of financial institutions into the health insurance market, provides further evidence that the old ways of doing things are no longer going to work. A new emphasis on reaching out to consumers and meeting them where they are is likely to place increasing competitive pressure on traditional insurance companies to adapt accordingly:
Although discount retailers selling health insurance may seem like an odd mix, it points out the need consumers have for alternatives, given the rising costs of health insurance, [J.D. Kleinke, a healthcare economist in Portland, Ore.] said.
Other major retailers including Target Corp. and Longs Drug Stores Corp. also have moved into the healthcare arena. At some Target stores in Minneapolis, shoppers can visit walk-up clinics staffed mostly by nurse practitioners for minor ailments, such as a bladder infection or seasonal allergies, with no appointment and little or no waiting. Target is contracting with Minneapolis-based MinuteClinic Inc. to run the clinics.
In Davis, Calif., this year, Longs unveiled its own in-store clinic. And also this year, the Wal-Mart Stores Inc.-operated Sam's Club began offering a discount program to members that cuts by as much as 50% the cost of some health services not covered by insurance, such as laser eye surgery and dental care.
This area is going to continue to grow, predict healthcare specialists like Kleinke, as rising costs push people to find new ways to insure themselves.
[Greg Scandlen, "Choice is revolutionizing health care," The Wichita Eagle, 28 September 2004.]
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