Providence to end most health insurance plans, forcing hundreds of thousands in Oregon to switch

Providence Health & Services plans to exit most of its Oregon health insurance business next year, citing rising costs, tougher regulation and intensifying competition from national insurers — a move that will force tens of thousands of Oregonians to find new coverage.

Leaders of the Renton, Washington-based health system announced the decision Wednesday, saying Providence will stop offering most plans through Providence Health Plan, including individual, family and employer coverage, as it seeks to strengthen its financial footing and refocus on delivering care rather than operating an insurance arm.

Providence Health Plan, based in Portland, is Oregon’s third-largest health insurer, covering more than 421,000 Oregonians. It also covers over 13,000 members in Washington, 4,800 in California and 1,000 in Montana.

It sells commercial, individual, small group and Medicare Advantage plans. The plan employs nearly 1,200 people across six states, including 878 in Oregon.

Most members will keep their current coverage through the end of 2026, giving employers and policyholders time to transition. Providence said it will stop renewing employer group plans as contracts expire but will honor existing agreements.

Providence leaders said hospitals and clinics will stay open to patients regardless of insurance changes and that the system is working to join additional insurance networks so patients can continue seeing Providence doctors under new plans. They said brokers will help employers find replacement plans that include Providence doctors and facilities.

Providence officials said the insurance arm plans to continue serving its roughly 55,000 Medicare Advantage members through a partnership with a national insurer, though that agreement is still being finalized.

Providence also plans to transfer administration of its Medicaid and Medicare supplemental plans to other organizations, which serves roughly 62,900 Oregonians, but officials did not identify potential partners.

Erik Wexler, Providence’s CEO and president, described the decision as a response to “an untenable situation,” telling employees in a message that costs, regulatory pressures and insurer consolidation have made it increasingly difficult for regional nonprofit plans to compete.

“It has become harder to support both running a health plan and delivering care,” Wexler wrote. “Meanwhile, the larger insurance companies have consolidated significantly, giving them the size and resources to operate more efficiently.”

Providence disclosed earlier this year that it was exploring the sale of its insurance arm after reporting a $102 million loss on roughly $2.5 billion in revenue. The losses were fueled in part by higher medical and pharmacy costs and a drop in its Medicare Advantage star rating to 3.5 out of 5 – assigned by the Centers for medicare & Medicaid Services, which can affect federal bonus payments and enrollment.

The move mirrors a broader national trend as hospital-owned health insurance plans struggle against giants such as UnitedHealthcare, Elevance and Aetna, which benefit from scale and lower administrative costs.

Wexler said the decision was not a reflection of the health plan’s performance or its employees.

“The direction we are taking is not a reflection of the quality of the plan or the dedication of the caregivers who support it,” he wrote. “Rather, it is about responding to the signs of the times and remaining steadfast and focused on our core work of delivering care.”

Providence leaders said they will provide transition support for affected employees and release additional details as agreements are finalized.

Providence is Oregon’s largest hospital chain, operating eight hospitals and more than 90 clinics across the state.

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