Costco to sell health insurance
America's largest warehouse store has partnered with Aetna to offer insurance online.
This post comes from Mark Chalon Smith at partner site Insurance.com.
Costco sells everything from toilet tissue in bulk to diamond engagement rings to caskets, and now individual health insurance plans are being added to the inventory.
Aetna is partnering with Costco -- known for selling 1 billion rolls of toilet tissue a year, enough to wrap around the world 1,200 times, according to CNBC -- to offer health insurance for individuals.
The Costco Personal Health Insurance program features five Aetna health plans with major medical benefits and dental coverage. The program is available in Arizona, Connecticut, Georgia, Illinois, Michigan, Nevada, Pennsylvania, Texas and Virginia.
It will be offered in additional states later this year, says Barbara DeMaio, head of individual business for Aetna. (Post continues below video.)
A click away
DeMaio says you won't be able to sign up for Costco Personal Health Insurance in the warehouses -- you'll have to go online for that. (More information on the plans can be found here.) But Costco's in-store employees do have brochures that provide details.
Costco-Aetna plans will cost less than Aetna's standard individual health plans, says DeMaio. It's difficult to specify how much customers can save, because individual plans differ and each person has his or her own medical needs, she says. However, DeMaio did say that most financial transactions for the plan are done online, which helps cut costs for both Aetna and Costco. Those savings are passed on to members.
Those who enroll will qualify for lower co-pays when they buy medications at Costco pharmacies, DeMaio says. Other benefits include "a personal health advocate to guide participants to better lifestyle choices," and wellness programs that focus on key trouble areas, like smoking and obesity, she says.
"We're looking to offer doctor and hospital services while providing simple steps for healthier lives," DeMaio says. "We want to reach the customers right where they are and give them choices. We see it as a way to build long relationships with Costco members."
This isn't Costco's first move into the insurance marketplace. Members can already purchase homeowners and car insurance through its partnership with Ameriprise.
Devon Herrick, a senior fellow and health economist for the National Center for Policy Analysis, a conservative think tank in Dallas, says Aetna may charge a lower premium for Costco shoppers because they comprise a low-risk demographic.
"I think the Costco customer is probably a fairly easy segment of the population to underwrite," Herrick says. "They're probably fairly affluent and, I'd imagine, in overall good physical shape, which is attractive to a medical insurer."
Herrick also thinks the Aetna-Costco partnership is a good idea, if only because it provides more opportunities for the consumer, especially as key provisions of the Patient Protection and Affordable Care Act (.pdf file) are scheduled to take effect in 2014. The act mandates that individuals, with some exceptions -- such as those with religious objections, those who receive a hardship waiver and members of Indian tribes -- must buy health insurance plans or pay a penalty of $95 in 2014, $350 in 2015 and $750 in 2016.
"It may be that Aetna and Costco will benefit a year and a half from now," says Herrick. "Also, there's really nothing to prevent other retailers from doing the same thing. It is, and will be, a competitive landscape for health insurance. Really, though, any time insurers go out of their way to reach consumers and make it easier (to have medical support), you have to see it as a good thing."
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If you have even the slightest medical issue don't waste your time to apply ... denied!!!!!
And I am presently insured thru AARP Aetna and still denied.
Sell me the plans of congress!
When COSTCO came to our town in OR last year I discovered that we couldn't get health insurance because our stat only let a few companies sell insurance. I am supporting a disabled husband, two college students and a son with severe mental health issues and no income. I am working two part time jobs. I have been employed with my first job for 17 years. In the last two years they cut most of the positions to part time and cut benefits to the majority of employees. My two sons have OHP, my husband ATRIO medicare supplement. His rx costs are only covered for about 1/2 the year. My 19 year old college student daughter has health issues and no insurance. She is getting $110.00 a week on unemployment. This makes her unable to get benefits because she is over income because her income is considered unearned income. I also have no health insurance and my wages have been garnished for years because of my husbands health. We need some changes before my daughter's credit rating is as bad as mine.
Peoples responses on this board are for the most part fairly uninformed. This isn't really a political issue.
Costco is basically acting as a broker for Aetna. Costco is doing this as it has a large and loyal customer base who value the company's ability to provide goods and services at costs lower than their competition. Aetna is partnering with Costco because of the same reason - it's ability to reach consumers. Costco will be able to negotiate a margin with Aetna that will allow them to make a small profit on the policies they sell. Aetna's actuaries will set premiums at a level that diversifies the risk over the broad base of insured individuals and allows for enough money to pay claims made on the policies, pay their employees, and their vendors.
PPACA (or Health Care Reform / Obamacare) Has established a claims 80/20 mandate for the funds that are paid in as premiums. Meaning - at least 80% of all the premiums paid in must go to pay for claims or expenses incurred by the insured. The remaining 20% or less is used to pay Aetna's employees, their vendors, and their agent commissions (in this case Costco is acting as a form of agent).
When you think about it - 20% or less of a company's total revenues has to cover the cost of all of their expenses, buildings, technology, commissions to brokers. If/ when there is anything left over they may pass along some dividends to shareholders.
There are many more luctrative businesses that escape attention for reaping large profits because their products are less irritating to use (the health care system is a giant PIA to use). think of your I Phone if you have one. Apple pays crapola wages in 3rd world countries to produce a slick, easy to use technology and probable profits over 100% of the costs associated with production.
I'm just offering some perspective here.
Why does anyone need health insurance for regular doctor visits? Eliminate the middleman and pay the doctor directly. Catastrophic insurance is much less expensive and helps cover high cost health situations.
@Soccerdad1849, Individual" health Insurance" (at least that's what it's called on my insurance license) is indeed regulated by the states, and although they don't "set" the rates, insurance companies must get their rates approved and can only apply for changes no more than once every 12 months. They will only have ONE set of rates per risk class and they can't discriminate by allowing one agency to offer lower rates than any other agency.
" Anybody who would choose to purchase Medical Insurance through Costco will be able to get the EXACT same plan(s) employees have to choose from, and Aetna is Costco's Medical Insurance provider."
This is demonstrably false. Costco employees are covered under a "GROUP" plan (this actually falls under federal regulations, ERISA to be precise). In fact Costco's employee coverage is a self-funded plan, Aetna just administers it. So if you're covered under your wife’s plan, you're not really even insured by Aetna, but Costco directly. There's nothing wrong with that, with larger employers, that's usually the way to go. But make no mistake about it. Costco is NOT selling the same plan to the general public that it provides to its employees. They couldn't even if they wanted to. The employees have a custom designed group plan that is guaranteed issue. The plans they want to sell to the public will be generic, fully underwritten individual policies, that will also be available through any other agency for the same price. It all comes down to who the customer wants to do business with, and who will provide the best customer service.
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