Providence, which runs 51 hospitals, 1,014 clinics and a range of health and social services across Alaska, California, Montana, New Mexico, Oregon, Texas and Washington, announced that its Providence Health Plan “will transition out of most of its health insurance lines of business beginning in 2027,” including individual and family and employer group/commercial plans.
Additionally, Providence is “actively working on a potential new agreement with another health insurance carrier” that would allow its approximately 55,000 Medicare Advantage members to retain their coverage for 2027. Providence is “evaluating options” for transferring management of its Medicaid program to another organization.
Coverage and service will continue without interruption for all current members and customers throughout 2026. The insurer stated that its members, customers, employers, and broker partners “will receive direct communications in the coming months to help them understand their options and plan ahead for 2027.”
Providence stated, “This news does not change provider contracts or network relationships in 2026. Providers should continue to deliver services to Providence Health Plan and Providence Health Assurance members as long as their coverage is active and valid. Claims processing, billing, and prior authorizations will continue normally throughout 2026. Beyond 2026, all necessary operations will be maintained to ensure claims are paid and obligations are met. We will honor all existing contractual and legal obligations through the duration of this transition and will communicate directly with our provider partners as decisions are finalized. Please refer to the provider portal for updates as we move through this process.”
According to reporting by The Oregonian, Providence cited “rising costs, tougher regulation and intensifying competition from national insurers” drove the decision. The newspaper said Portland-based Providence Health Plan insures more than 421,000 Oregonians, 13,000 Washingtonians and 4,800 Californians, and employs nearly 1,200 people across six states.
It reported that Providence hospitals and clinics will remain open to patients “regardless of insurance changes” and that the health system is “working to join additional insurance networks so patients can continue seeing Providence doctors under new plans.” It quoted an email to employees from Providence CEO and President Erik Wexler, who said the decision is a response to “an untenable situation … It has become harder to support both running a health plan and delivering care. Meanwhile, the larger insurance companies have consolidated significantly, giving them the size and resources to operate more efficiently.”
According to The Oregonian, Providence Health Plan reported 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 … which can affect federal bonus payments and enrollment.”
The Oregonian noted that 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.”
