Providence will shutter most of its insurance business beginning in 2027, ending more than 40 years as a regional payer with 440,000 members.
“We are doing this because changes in the healthcare environment, including state and federal regulation, have made it increasingly difficult for regional, not-for-profit health plans like PHP to thrive,” Providence President and CEO Erik Wexler said May 20. “And 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. This has left us in an untenable situation.”
Providence will exit the ACA market, stop renewing employer group contracts, and transfer its Medicaid and Medicare supplement programs to other organizations. The Renton, Wash.-based health system said it is in discussions with an unnamed national insurer to “potentially operate” its Medicare Advantage business, which covers more than 64,000 members.
In addition, the move affects more than 260,000 commercial members and more than 58,000 Medicaid enrollees, predominantly in Oregon. The Portland-based plan also partially administers benefits for public employees in the state. More information about the future of the insurer’s Medicare supplement, D-SNP and employer group waiver plans is expected at a later date.
The insurer employs 1,150 people and said it is “committed to supporting caregivers with transitional resources in the months ahead.”
The exit follows months of uncertainty for the plan. In March, the health system disclosed it was exploring strategic options for the plan, including a potential sale.
Providence Health Plan reported a $102 million net loss on $2.5 billion in revenue in 2025, driven by rising medical and pharmacy utilization and a drop to a 3.5 Medicare Advantage star rating. CEO Don Antonucci previously told Becker’s that the plan was working toward financial stability this year after implementing pricing adjustments, exiting underperforming markets and cutting administrative costs, including layoffs. The plan had rebounded to a four-star MA rating for both 2026 and 2027 revenue years.
“Like others in the payer industry, especially regionals, it was a difficult year for the health plan from a financial perspective,” Mr. Antonucci said at the time. “We saw the same headwinds and challenges on the payer side, with utilization up for medical costs and pharmacy costs.”
For current members, there will be no changes through the end of 2026. Providence said it will honor all existing contracts and help members and employers identify coverage options for 2027 that include Providence providers. The system said its facilities will remain available through other insurers’ networks and that it is working to be included in additional networks ahead of the transition. ASO employers will need to identify a new third-party administrator for 2027.
Providence is among a growing number of health systems stepping back from operating insurance plans as industry-wide financial pressures compound, with Mr. Wexler saying “it is disappointing to see this trend of provider plan closures across the country.”
“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 said. “Rather, it is about responding to the signs of the times and remaining steadfast and focused on our core work of delivering care and becoming the best place to give and receive care.”
Providence’s broader financial picture has weighed on its options. The system posted a $486 million operating loss on $29.5 billion in revenue in 2025, an improvement from a $546 million operating loss the prior year but still reflecting sustained pressure from labor, supply and regulatory demands. The system has been aggressively restructuring, selling its health IT consulting arm, its clinical decision support platform, and 10 skilled nursing facilities, among other divestitures.
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