Providence insurance exit: What the health plan shutdown means for Oregonians

The decision by Providence Health & Services to shut down most of its insurance business didn’t come out of nowhere.

Before announcing the pullout this week, the Renton, Washington-based Catholic hospital system spent months scaling back its insurance operation as financial pressures across the organization mounted.

Last year, Providence Health Plan, the company’s Portland-based insurer, outsourced key administrative work for employer plans to California-based Collective Health, moved health coverage for Providence employees to Aetna and eliminated some health plan jobs as executives worked to shore up the bottom line.

In March, Providence officials said they were exploring a sale of the insurance division.

On Wednesday, President and CEO Erik Wexler told employees that the health system would instead wind down most of the insurance business. It was a sign, he said, of how difficult it has become for regional nonprofit insurers to compete with national giants that have deeper resources, broader enrollment and lower administrative costs.

Here’s what Oregon patients and health plan members need to know:

You’ll likely need new insurance by 2027

Most Providence Health Plan members will need to switch coverage next year.

Providence is exiting nearly all of its commercial insurance business — the plans people get through employers, the Affordable Care Act health marketplace or directly from the insurer. Those plans make up the vast majority of Providence Health Plan’s membership.

Overall, the insurer covers more than 435,000 people across Oregon, Washington and California, including more than 400,000 Oregonians.

Your current plan should stay in place through 2026

Nothing changes for Providence Health Plan members this year.

Providence officials say members can keep their current health coverage, doctors and prescription benefits through the end of 2026. They said the insurer will honor existing contracts to give individuals and employers time to compare options before the changes take effect.

Employer-based plans will phase out gradually

If you get Providence coverage through work, your timeline depends on when your employer’s contract expires.

Providence says it will stop renewing employer group plans and will not offer new ones, but it will honor existing contracts through their scheduled end dates. Employers could choose to switch carriers earlier, so some workers could move off Providence before the end of the year, but Providence is not cutting off any employer plans mid-contract.

State health officials say Providence covers 65% of Oregon’s 144,000 public employees. They will choose between Kaiser Permanente or Moda Health next year.

You may still be able to see Providence doctors

Providence is shutting down insurance plans, not hospitals or clinics. The health system says its doctors, hospitals and clinics will stay open and in other insurers’ networks. Providence is also working to join additional plans so patients may be able to keep seeing Providence providers if they pick coverage that includes them.

Medicare Advantage members may see a different insurer, not different care

Providence says it plans to keep its Medicare Advantage business alive through a partnership with a national insurer, though that deal isn’t yet final.

That business, Providence Health Assurance, covers just over 55,000 members in Oregon and roughly 9,100 in Washington and California.

Providence says the goal is to let those members keep their Providence doctors and care network, even if the insurance card carries a different company’s name.

Medicaid coverage is expected to transfer

About 58,400 Oregon Health Plan members — people enrolled in the state’s Medicaid program — get their Medicaid coverage through Providence.

The health system says it plans to hand that business off to another organization but hasn’t identified a partner or timeline yet.

Providence participates in the Oregon Health Plan through Health Share of Oregon, the coordinated care organization serving Clackamas, Multnomah and Washington counties.

Amy Bacher, a spokesperson for the Oregon Health Authority, said state officials are working with Health Share and Providence to plan the transition and keep disruptions to patients’ care to a minimum, even on a tight timeline.

Some Medicare plans are still under review

Providence still hasn’t made final decisions about some of its government-backed insurance plans.

For now, Medicare supplement plans, dual-eligible special needs plans and employer group waiver plans will stay the same through 2026. If that changes for 2027, members will be notified in advance.

Help will be available to choose a new plan

Providence says employers will not have to navigate the transition alone.

The company says insurance brokers will help businesses find replacement coverage, including plans that keep Providence doctors and hospitals in-network where possible.

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