Costco Isn’t Selling Insurance — It’s Selling the One Thing Healthcare Lost: Trust
(SeaPRwire) –
Strip away the press-release gloss and the Costco healthcare move is not about insurance at all. It is about monetizing a trust surplus that took forty years to build. The warehouse giant that sells $10,000 diamond rings and $20,000 Swiss watches alongside $1.50 hot dogs now wants to sit between you and your Medicare decision. That sounds absurd until you look at the math of trust. Over 82 million households pay $65 to $130 a year just to walk through the door, and U.S. renewal rates hold at 92.3%, a figure matched only by Amazon Prime. Costco has already proven it can sell high-stakes, low-information products — diamonds, caskets, hearing aids — because members believe the vetting was done for them. Medicare Advantage is simply the next confusing, high-stakes purchase on the shelf.
The actual transaction is modest on paper. Costco and SCAN Health Plan, a nonprofit Medicare Advantage insurer, plan to sell co-branded Medicare Advantage plans in two states and a Medicare supplement plan in a third, pending federal approval. Distribution runs through warehouses, agents, and online channels. SCAN’s CEO, Dr. Sachin H. Jain, frames it as “a streamlined, member-first healthcare delivery model.” Costco calls it a pilot. But pilots at Costco rarely stay pilots. The company already operates pharmacies, optical centers, and hearing-aid counters serving millions, and it already provides pharmacy and hearing services to SCAN members. This deal is not an entry into healthcare. It is the formalization of infrastructure that has been quietly running for years.
The subtext here is the commercial loop. Costco is not delivering care, not hiring physicians, not building clinics. It is lending its brand as a vetting layer on top of an existing insurer and taking a position in the distribution flow. The customer acquisition cost for Medicare Advantage plans is notoriously brutal — television is saturated with celebrity-spokesperson ads precisely because trust is expensive to buy. Costco gets that trust for free, prepaid by decades of rotisserie chickens and no-questions-asked returns. Every plan sold through the warehouse is a margin stream with near-zero marketing spend attached, and every sale deepens the membership relationship that drives the core retail flywheel.
Now look at the competitive response, because it explains the gap. Walmart had the scale and the brand, yet it shut down its health clinics in 2024 — a failure that proves running care delivery is a miserable business. But Costco read that failure correctly. Choosing coverage and delivering care are different businesses, and Costco picked the one where trust is the entire product. Amazon has more members and has made real healthcare moves, yet its steps remain tentative and its results unclear. Amazon’s relationship is transactional and screen-mediated. Costco’s is physical, face-to-face, reinforced weekly. A 2021 Center for the Digital Future survey asked Americans which non-traditional company they would choose for health insurance, and Amazon, Costco, and Walmart won by wide margins over Apple, Google, Microsoft, and Facebook. The stated reason: “I know and trust them and they offer good value.”
Notice who lost that survey. Big Tech once looked like the natural candidate to disrupt healthcare and finance, but the reputational damage of recent years created a barrier that money cannot quickly repair. The trust vacuum in high-stakes consumer categories is real, and it follows the classic disruption pattern — Uber walked through the door opened by terrible taxi service, and digital music walked through the door opened by $17 CDs. Healthcare and financial services are today’s version of that dissatisfaction. Costco already holds a foothold in finance through its co-branded credit card and insurance offerings. Expect the same logic to apply there, and expect Walmart and Amazon to follow.
The company that mastered selling you things you never planned to buy has just identified the most confusing, highest-stakes purchase in American life — and it intends to be the shelf you grab it from.