Costco has made previous forays into health insurance sales. Conlon says several years ago the company recognized the potential of the individual market and signed with what was then PacifiCare to sell individual health insurance policies in California. Costco enjoyed some success in the market and began looking for a single partner to develop a national product. Aetna had been though a similar experience with AARP, where it offered a custom program. "We saw a lot of similarities and a good fit,"DeMaio says.
The two companies have been rolling out their health insurance program for two years. Conlon admits that expansion is slow as Costco waits for approval to act as an insurer in various states. The company collects commissions on the health insurance policy sales.
Costco is interested in continuing to expand its competitive position in the insurance and healthcare business. It has a laundry list of possibilities, including the potential to develop a private health insurance exchange.