The hot take on this one is already forming, and it is wrong.
Costco and SCAN Health Plan announced this week that they are building a suite of senior focused insurance products together. Within hours the framing showed up in my feed. Retail is coming for Medicare agents. The warehouse club is going to disintermediate distribution. Another channel gone.
Read the announcement again, because that is not what it says.
What was actually announced
SCAN Health Plan is one of the largest nonprofit Medicare Advantage plans in the country. It currently serves members across 33 counties in California, Arizona, Nevada, Texas, New Mexico, and Washington. The partnership with Costco, which is pending regulatory approval, would roll out a set of products over the coming years including a rebuilt pharmacy experience, over the counter pharmacy benefits, vision coverage, and audiology and hearing benefits.
Sachin Jain, who runs SCAN Group, framed it around the disjointed experience seniors face when navigating care. Costco CEO Ron Vachris framed it as an extension of forty years of delivering value to members. Both of those are the kind of thing executives say in a press release, and both are probably also true.
The line that actually matters got buried. According to reporting on the deal, the plans will be sold in Costco stores and also made available through insurance agents and websites.
Not instead of agents. Alongside them.
That is not a rounding error in the announcement. That is the entire operating model, and it tells you something about how this is going to work that the disintermediation take gets exactly backward.
Retail health has a graveyard, and the survivors learned something
It is worth remembering how the last several years of retail moving into healthcare have gone.
Walmart built out primary care clinics across dozens of locations and then shut the whole thing down, citing an economic model that would not work. Walgreens poured billions into VillageMD and then took enormous writedowns and closed locations. The one arrangement that has held up reasonably well is CVS owning Aetna, which is to say the one where a retailer partnered with, or bought, an actual insurance company rather than trying to become one.
Costco is not building a health plan. It is partnering with one that already has the licenses, the CMS contracts, the star ratings, the provider networks, and the compliance infrastructure. That is a meaningfully smarter structure than what Walmart and Walgreens attempted, and it suggests somebody in Issaquah studied the last five years closely.
But it also means Costco inherits the constraint that comes with the category. You cannot sell Medicare Advantage the way you sell a rotisserie chicken.
Why this cannot be staffed by retail associates
This is the part of the story that nobody outside the industry seems to understand, and it is the reason the disintermediation take falls apart.
Every single person who sells a Medicare Advantage plan needs a health insurance license in the state where the sale happens. They need an appointment with the carrier. They need to complete certification annually, which for most of the market means AHIP or an equivalent, plus carrier specific product training, every year, before they can sell a single application for the coming plan year.
On top of that sits CMS marketing regulation, which governs what can be said, in what setting, with what disclaimers, and after what kind of contact. There are rules about how a beneficiary can be approached in a retail environment. There are rules about what constitutes a scope of appointment. There are rules about how leads can be generated and transferred. The compliance surface here is enormous, and it has gotten tighter, not looser, over the past several enrollment cycles as CMS has cracked down on marketing practices in the space.
So when you read that these plans will be sold in Costco stores, do not picture a member service employee ringing up a Medicare Advantage enrollment next to the tire center. Picture licensed, appointed, certified agents operating in or around a retail footprint under a compliance structure somebody had to build.
That is a talent problem before it is anything else.
The timing tells you how tight this actually is
Annual Enrollment opens October 15 and runs through December 7. That window is the entire commercial year for a huge portion of Medicare distribution, and licensed Medicare agents are the scarcest resource in the industry during it.
That scarcity is not new and it is not cyclical. It has been building for several seasons. Field marketing organizations compete for the same agents every fall. Carriers fight over shelf space in agent portfolios. Independent agents get courted from six directions starting in August. And the broader retirement wave hitting insurance generally is thinning the experienced end of that bench at the same time.
Now add a national retail brand with hundreds of warehouses and a membership base in the tens of millions, potentially needing licensed distribution capacity in whatever markets this expands into.
If this stays at 33 counties, it is an interesting pilot. If it works and expands, somebody has to build that bench, in a market where every player is already fishing from the same pond and complaining that it is empty.
What this means if you are a firm leader
A few things worth thinking through.
If you run an agency or an FMO with Medicare distribution, this is not an existential threat, but it is a competitive signal. The competition for licensed Medicare talent in your markets is about to include a brand with more consumer trust than any carrier in the country. You are not losing clients to Costco. You may lose agents to whoever is staffing this.
If you are a carrier, watch the distribution structure carefully rather than the headline. The interesting question is not whether Costco sells Medicare. It is what commission and support structure gets built around it, and whether that resets expectations for what agents demand elsewhere.
And if you are hiring in this space at all, understand what you are actually competing for. Not a salesperson. A licensed, appointed, currently certified professional who knows CMS marketing rules well enough to not get you fined, and who has done this through at least a couple of enrollment cycles. That person has options in September and knows it.
What this means if you are an agent
The honest read is that a partnership like this probably grows the category more than it cannibalizes it. Medicare Advantage already covers more than half of all Medicare beneficiaries, and the enrollment decision remains genuinely confusing to most people making it. A trusted retail brand putting the category in front of millions of members likely creates more informed shoppers, not fewer conversations.
But it also raises the floor on what a professional relationship has to be worth. If someone can encounter a plan in a warehouse aisle, the value of sitting with an agent has to be something a display cannot replicate. Plan comparison across carriers, understanding of provider networks, knowing what happens when someone's specialist is not in network, the annual review that catches a formulary change before it costs them. That work has always been the actual product. It is just going to become more obvious that it is.
The bottom line
Costco did not announce that it is replacing insurance agents. It announced a partnership that, by its own description, runs through agents as one of its distribution channels.
Every version of this that scales requires more licensed people, not fewer. And it arrives in a market that has been short on licensed Medicare talent for years, weeks before the busiest enrollment period of the year opens.
That is the story underneath the story. It usually is.
Bror David Johnson
Founder & Executive Recruiter, Retention Search
773-573-5942 | bdjohnson@retentionsearch.com
www.retentionsearch.com