Costco (COST) is stepping into one of the biggest markets in American business. The warehouse chain is teaming up with SCAN Health Plan, a nonprofit insurer focused on seniors, to sell Costco-branded Medicare plans. It’s a limited start, with Medicare Advantage products launching in two states and a Medicare supplement in a third, all pending regulatory approval. But the Medicare Advantage market they’re entering is enormous, worth more than $500 billion a year.
The move makes more sense once you see what Costco has been building. Healthcare has quietly become one of its strongest growth areas. On the company’s most recent earnings call, management said pharmacy led the way among its extra services and gained significant market share in the quarter. The success came primarily from surging demand for weight-loss drugs like Wegovy and Ozempic. Costco members already fill prescriptions, buy glasses, and get hearing aids on their warehouse trips. Medicare is the natural next step.
