Costco to offer health plan to some members in California

The discount giant enters the fray of companies seeking to sell to the uninsured and to those losing benefits through their jobs.

By Katherine Vogt, AMNews staff. June 27, 2005.

Costco Wholesale Corp., the discount retailer of everything from giant tubs of mayonnaise to caskets, is making a foray into the health care market by rolling out individual and family health insurance plans.

Under a pilot program beginning in July, Costco will offer two PPOs to members in Los Angeles and Orange counties in California. If the program is a success, the retailer may expand the offering to members statewide by the end of the year.

Though some other discount chains offer limited health services, Costco is believed to be the only major retailer to sell health insurance to its customers, said Dellanie Fragnoli, assistant vice president for insurance services at the Issaquah, Wash.-based company.

The program comes at a time of change in the health insurance market as soaring costs have forced businesses to cut benefits for individuals and as new products such as health savings accounts are being rolled out.

Also, the estimated 45 million Americans without health insurance are increasingly being viewed as a market opportunity. WellPoint is considering expansion of its Tonik health plan -- aimed toward young singles -- outside of California, where it is now sold. Meanwhile, America Online founder Steve Case said in April he's investing $500 million of his own money to establish a new company called Revolution, which will market consumer-directed health plans and promote wellness programs.