SACHA PFEIFFER, HOST:
If you belong to Costco, you might use your membership to buy not just bulk food and household supplies, but also eyeglasses, hearing aids and prescription drugs. Now Costco is getting ready to offer another healthcare product, Medicare plans. And no Costco membership will be required. Anna Wilde Mathews wrote about this for The Wall Street Journal. And she's with us to provide details. Anna, welcome.
ANNA WILDE MATHEWS: Thank you.
PFEIFFER: For any of our listeners not familiar with Medicare and its various complicated forms, what exactly is the product Costco will be selling?
MATHEWS: Well, there are actually two. One is a Medicare Advantage plan. And that's where a private insurer basically handles all of your benefits as a Medicare enrollee. And the other is a Medicare Supplement plan. And that's a plan that you buy that basically runs on top of normal government Medicare.
PFEIFFER: Big-picture industry question - why would Costco want to get into this business?
MATHEWS: Well, it's very much just an experiment at this point. I would say they don't have much to lose because it's just a pilot program. It'll just be in three states. But the reason to consider going into it for Costco is it's just a new way to connect with their members. They have a very, very loyal membership. And they are looking to offer sort of more touchpoints for their members. And Medicare is a huge, huge business. It's more than $600 billion for insurers altogether. That's across, obviously, the whole country. So if it does succeed, that could be huge.
PFEIFFER: And then how could it be beneficial to consumers to buy Medicare at Costco? For example, could these plans be cheaper than usual, similar to the rest of Costco's bulk pricing?
MATHEWS: Well, we really have yet to see what the details are going to be. But what Costco and SCAN, the insurer that they are working with, have so far said is that these plans are supposed to integrate really closely with Costco's offerings, things like pharmacy, over-the-counter medication, vision benefits, hearing products, things that Costco already offers. So the thought would be that it would be convenient.
PFEIFFER: For people who need Medicare, it's obviously extremely important to their life. So why would a customer go to a Costco to get their Medicare?
MATHEWS: I think what the companies are bargaining on is that there's just a lot of loyalty and trust by the Costco consumer, and that if Costco says it's good, it'll be good. But definitely, any Medicare beneficiary who's making a choice of a plan needs to look at a lot of things. Costco might be super convenient. They might have a lot of loyalty to Costco.
But they'd want to look at other things, like, for instance, what doctors and hospitals are in the network of these plans. They might want to look at what are the out-of-pocket charges they might have for different services they would need. They might want to look at the formulary, the drugs that the plan covers, and what kind of conditions are on those drugs. So I would say that it's always a challenging choice for Medicare beneficiaries. And there are a lot of things to look at in addition to or beyond the possibility of using Costco.
PFEIFFER: Yeah, still a lot of research to do on the consumer end.
MATHEWS: Definitely.
PFEIFFER: You mentioned that this will be rolled out in three states. Do we know which three states? And do we know when?
MATHEWS: We do not know which three states. But southern California might be one of the regions because that's where SCAN, the insurer, is based. SCAN also offers Medicare Advantage plans in Arizona, Nevada, New Mexico, Texas and Washington state. So, again, those might be possibilities for the three markets that they're looking at. They've been very coy about exactly when the plan would roll out, but it seems likely that it could potentially be this fall during the enrollment period for Medicare beneficiaries. But we'll just have to watch and confirm that's true.
PFEIFFER: Anna Wilde Mathews is a reporter for The Wall Street Journal. Thank you for your time.
MATHEWS: Thank you.
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