Providence Health Plan to close completely after Medicare Advantage deal falls through

Dive Brief:

• Providence Health Plan is completely shutting down, after a deal with a national insurer to keep its Medicare Advantage business running fell through.
• The insurance division of the Renton, Washington-based nonprofit hospital operator announced in May that it would wind down its commercial and Medicaid businesses in 2027, but that it was working with an unnamed carrier to continue its MA plans. But Providence and the third party were unable to reach an agreement, “despite significant effort on all sides,” a Providence spokesperson confirmed.
• Providence is talking with regulators about the development and the broader closure of its health plans, and will share more details as soon as it’s able, the spokesperson said.

Dive Insight:

Providence Health Plan covers about 440,000 people in a handful of western states. The insurer operated for more than 40 years. But growing challenges — including burdensome regulatory overhead, skyrocketing medical spending and fierce competition from national carriers — made continuing increasingly unsustainable, according to Providence CEO Erik Wexler.

The system said in May that it would stop offering individual and family plans on or off the ACA exchanges for 2027, and would not renew employer group plans as contracts come up for renegotiation. Providence is seeking a buyer for its Medicaid plans, with an update expected later this year on whether it’ll sell or close.

The company’s MA business looked set to be the sole surviver of the regional health plan’s dissolution, with a deal in the works with a national insurer that would have allowed current members to continue their coverage for 2027. But it’s now set for the scrap heap as well after negotiations fell through, the spokesperson confirmed.

The closure will affect more than 64,000 MA seniors covered by Providence. Providence declined to provide the name of the potential acquirer.

Providence began exploring a sale of its insurance division in March as the nonprofit, which operates 51 hospitals in the western half of the U.S., looked to break an unprofitable streak. Providence hasn’t posted an annual profit in four fiscal years, facing staffing shortages and economic forces like tariffs and inflation.

Providence’s health insurance division has also been a drag, losing more than $100 million in 2025, according to financial disclosures. Though, the insurance assets held for sale shrunk their losses to $4 million in the first half of 2026, according to Providence’s most recent financial disclosure.

The system has shown broader progress on its turnaround this year. Providence generated $349 million in net income in the first half of 2026, compared to a loss of $69 million in the first half of 2025. Executives chalked the improvement up to paring back mid-level executives, reducing reliance on agency staffing and trimming underutilized services.

Providence has also sold a number of businesses this year, including its health IT consulting business and a clinical decision support tool. The company has also signed a definitive agreement to sell a hospital in California to nonprofit NorthBay Health, and that deal is expected to close by the end of 2026.

Providence is not the only company trimming its insurance offerings after being battered by a maelstrom of higher spending and flatlining reimbursement hitting government programs the past two years.

CVS’ Aetna left the ACA exchanges for 2026, while Cigna recently bowed out of both the ACA and MA markets. Centene is exiting Arkansas’ Medicaid expansion program, along with its ACA business in New Hampshire. 

Baylor Scott & White, another integrated health system, is exiting its Medicaid and ACA businesses this year, while CareSource is exiting the ACA in Indiana, Ohio and West Virginia. Medica is also discontinuing individual ACA plans in three states, while Elevance is leaving the small group exchanges in Ohio.