Urbana-based Carle Health to lay off 612 workers, as it winds down its insurance companies

Urbana-based Carle Health is laying off 612 workers as it winds down two of its subsidiary health insurance companies.

Carle Health – a system that includes eight hospitals in central Illinois – announced earlier this year that its insurance company subsidiaries Health Alliance and FirstCarolinaCare would cease operating all lines of business, except Medicare Advantage plans.

Health Alliance offers insurance plans in Illinois, Indiana, Iowa and Ohio. The company’s health plans will maintain operations through the rest of 2025.

Carle plans to “reduce staff on a rolling basis to maintain full support of member services throughout the remainder of 2025,” a spokesperson said Monday. The first of the layoffs is scheduled to begin July 8, according to a required notice filed last week with the Illinois Department of Commerce and Economic Opportunity.

Earlier this year, Carle explained its plan to wind down its health insurance subsidiaries in a news release, saying the health insurance industry has changed dramatically in recent years, especially for insurance companies owned by health care providers.

“Because of this, health plans, like Health Alliance and FirstCarolinaCare have struggled to achieve operational and financial efficiency,” Carle said in the release.

Specifically, Carle’s health insurance subsidiaries have struggled with medical inflation, rising prescription drug costs, more patients with chronic conditions and changing technologies, among other challenges, according to the release.

Though Health Alliance and FirstCarolinaCare worked to grow larger in recent years in hopes of overcoming those challenges, “they have not been able to reach a financially viable level to compete effectively in today’s environment,” according to the release.

“We recognize that in today’s health insurance environment, our health plans no longer successfully compete and Carle Health must effectively utilize our resources to meet the changing needs of customers,” Dr. James Leonard Carle Health president and CEO said in the release.

In Illinois, Health Alliance offers health plans for individuals and employers as well as Medicare Advantage plans and Medicare Supplement plans. This year, Health Alliance offers plans on the state’s Affordable Care Act exchange throughout most of Illinois, outside of the Chicago area. Its exit could mean that for some residents of central and southern Illinois, their only option for an exchange plan for next year might be through Blue Cross and Blue Shield of Illinois, depending on which insurers offer plans and where for next year.

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