‘The Disadvantage Plan Is All About Denial’: Clark Howard Slams Costco’s Medicare Plans as Growth Slows to 3.8%

“Costco. Do you know what you’re doing here? You know who you’re messing around with?” Consumer advocate Clark Howard, usually one of the warehouse club’s biggest fans, said that on his show on October 5.

He was responding to SCAN Costco Medicare Advantage. Costco (NASDAQ:COST | COST Price Prediction) and the nonprofit insurance company SCAN Health Plan launched this HMO on October 1. Coverage starts January 1, 2027, in 17 California counties and two Nevada counties. Howard called it “an experiment” and added, “fortunately I think it’s only in two states.”

He calls these products “disadvantage plans” and says that when patients need care most, “the disadvantage plan is all about denial.” He also pointed to “new data about the games that advantage plans play, not caring if they cost your health or your life to save them money.”

If you choose wrong at 65, one hospital stay can cost thousands of extra dollars. In most states, you may lose the chance to switch back.

Costco Is Selling Medicare to Members Who Are Aging Into It

On September 28, Jim Cramer noted that Costco ended fiscal 2026 with 84.1 million members, up 4%, which was below expectations. He called that “a real problem.” Ten days earlier, he said the club is “having problems getting younger people to sign up for membership.”

On the earnings call, Chief Financial Officer Gary Millerchip called the slowdown “a normalization” as younger members who signed up online move through renewals. Costco’s most loyal members are reaching Medicare age, and the company now has a Medicare product to sell them.

Shares trade near $921. That’s up about 1% over the past year, following a 627% gain over ten years.

Membership fee income still grew 7% to $1.85 billion last quarter, so the Medicare plans expand a services business that is still growing.

Prior Authorization Data Backs Up Howard’s Warning

Howard has this one right. Medicare Advantage plans use prior authorization: the insurance company has to approve many treatments before you can get them. Original Medicare rarely requires that.

KFF figures for 2024 show insurance company denied 8% of Medicare Advantage prior authorization requests. Patients appealed just 12% of those denials, and 81% of the appeals won. So most denials get reversed when someone pushes back, yet very few people push back. The plan keeps the savings every time a patient gives up.

Every Advantage plan caps what you pay for in-network care. The National Council on Aging puts the 2026 federal ceiling at $9,250. With Original Medicare plus a Medigap Plan G policy, the most you owe for covered care is the $283 Part B deductible. This cap is set very high.

One Bad Health Year Changes Which Plan Wins

Everyone pays the 2026 Part B premium of $203 a month. For this example, assume Plan G costs $180 a month.

In a healthy year, the Advantage plan comes out $1,943 ahead. In a year with a cancer diagnosis or a hip replacement, it costs you $6,807 more. Original Medicare also needs a separate Part D drug plan, which adds to that side’s cost.

The bigger problem is getting out. When you first enroll in Part B, you get a six-month window to buy Medigap, and insurance company must accept you. After that window closes, insurance company in most states can turn you down or charge more because of your health. If you pick Advantage now and get sick at 72, Plan G may be out of reach just when you need it (we mapped out this and the other surcharges and coverage gaps retirees run into in a free Medicare guide).

Run These Numbers Before Picking a Costco-Branded Plan

1. Get Plan G quotes for your age and ZIP code using Medicare.gov’s plan finder. Add a year of Part B premiums and the deductible. The total is your worst-case year on Original Medicare.
2. Look up the out-of-pocket maximum in the Summary of Benefits for any Advantage plan you’re considering, including SCAN Costco’s, and add Part B premiums. The difference from step one is what a bad year would cost you.
3. Make sure your doctors, specialists and nearest hospital are in the HMO network. HMOs generally don’t cover out-of-network care except in emergencies.
4. Find out whether your state lets you switch Medigap policies later without a health review. If it doesn’t, treat the choice you make at 65 as close to permanent and plan for your worst year.

Expect Costco and SCAN to market the plan to members during open enrollment. Run your worst-year numbers before you sign up.

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