Thursday, April 21, 2005

Costco to Soon Sell Health Insurance

The San Diego Union reports:

Plans will be available for California members

Costco, the popular wholesaler of all things huge, plans to add individual health insurance to its array of products and services in California in the next six months.

The Issaquah, Wash., company has sold health insurance to some of its small-business members in the West for several years and plans to add individual plans for its general membership.

"We realize we don't have to be everything to everybody," said Patrick Callins, Costco's vice president of member services. "We are looking at programs where we can help people save some money."

Because many people are struggling with the high cost of health care, several retailers are carving their own low-cost niche in the market.

Callins said the company is able to provide lower-cost health insurance – 5 percent to 20 percent less expensive than what members could buy on their own – by creating an efficient market to sell them.

The company said it creates the savings by selling a plan with large deductibles and co-payments and at the same time eliminating the commission that agents might otherwise get for the sale of the plan.

PacifiCare Health Systems designed and manages the two PPO plans Costco currently offers.

Costco is still developing the individual plan and declined to discuss its details.

Callins said the company's services, from merchant credit card processing to health insurance, are designed for what Costco said is its core membership – the small-business owner.

Martyn Hopper, the California state director of The National Federation of Independent Business, said, "It (health insurance) is the No. 1 concern of small-business owners."

According to a study by the Kaiser Family Foundation, more than half of small firms shopped for a new plan in 2004, compared with 37 percent of large companies.

Jill Peterson said she looks to Costco for nearly everything for the small business her husband and his partner run. The company, Mikelson Yachts in San Diego, was self-insured, which was getting expensive.

So when Peterson, who handles the administrative issues for the company, was evaluating other options, she said it seemed natural to look to Costco.

Peterson said she couldn't recall the exact cost, but said it was less than they spent before, and an insurance agent told her he couldn't make her a better deal.

Other retailers are targeting the small-business market as well. Sam's Club started offering a health discount program to its members last month.

The program, run by California-based Health Allies, provides access to services that are not typically covered by insurance, such as cosmetic dentistry, hearing aids and vision services.

In the first few days it was available, Sam's Club said it was one of the top five services it sold.

"It's very difficult for everybody to afford some health care options," said Pat Quinn, member services manager for Sam's Club.

Although the state of California changed the market for small group insurance a few years ago, which made health insurance more readily available to small businesses, problems persist. Many companies, large and small alike, have difficulty affording the premiums or can only afford scaled-back plans.

Ok, Costco Dentistry and the Cerec 3D are not a myth.

Are the rumors true that Sirona/Patterson have sold hundreds of Cerec 3D machines to Costco in anticipation of opening their own dental offices?

Stay tuned.

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