Oregon-based health insurer PacificSource has announced significant operational changes, including laying off 381 employees and withdrawing from key sectors of the state's Medicaid program. These moves will impact over 100,000 Oregon Health Plan members and represent a major shift in the region's healthcare landscape.
The company cited rising healthcare costs and challenges with Medicaid funding as primary drivers for the decision. The workforce reduction amounts to approximately one-fifth of its total employees, with the majority of affected staff based in Oregon.
Key Takeaways
- PacificSource is laying off 381 employees, which is about 20% of its workforce.
- The company is ending its Medicaid contract in Lane County, affecting approximately 90,000 members.
- An additional 20,000 members in the Portland metro area will be transitioned as PacificSource exits its partnership with Health Share of Oregon.
- The company attributes the changes to rising healthcare costs and insufficient Medicaid funding rates.
Workforce Reduction Hits Oregon Hard
PacificSource confirmed it will reduce its staff by 381 positions in the coming months. This total includes 56 previously announced layoffs and a new, larger round of 325 job cuts. The company, which had around 1,800 employees, is seeing a substantial portion of its workforce eliminated.
In a notice filed with the state, the insurer specified that 265 of the employees impacted by the latest round of layoffs are based in Oregon. The company directly linked the job cuts to a "significant loss of Medicaid membership" following its decision to end its contract in Lane County.
"Like many health plans, we continue to face significant pressures, including rising healthcare costs and Medicaid funding challenges in Oregon," company spokesperson Lauren Thompson said in a statement.
By the Numbers: PacificSource's Restructuring
- Total Layoffs: 381 employees
- Oregon-Based Layoffs: 265 in the most recent round
- Affected Medicaid Members (Lane County): ~90,000
- Affected Medicaid Members (Portland Metro): ~20,000
Major Shift in Oregon's Medicaid Program
The most significant impact of PacificSource's restructuring will be felt by members of the Oregon Health Plan (OHP), the state's Medicaid program. The insurer is making strategic withdrawals from two major markets, forcing tens of thousands of residents to find new insurance administrators.
Lane County Contract Termination
In Lane County, PacificSource is set to end its contract to provide health insurance for approximately 90,000 OHP members. The company stated it could not continue services at the reimbursement rate offered by the Oregon Health Authority for the 2026 contract year.
State officials are now planning to assign these members to Trillium, another insurer operated by the for-profit company Centene. This change represents a massive transition for a large population of Medicaid recipients in the county.
Portland Metro Partnership Ends
In the Portland metropolitan area, PacificSource is also pulling out of its role within Health Share of Oregon, the region's largest coordinated care organization. This move affects about 20,000 members who are part of the Legacy-PacificSource plan.
Officials from both Legacy Health and PacificSource have stated that the change should not disrupt patient care. Legacy Health, a major owner of PacificSource, intends to find a new administrative partner for 2026 to manage these members.
A spokesperson for Legacy Health affirmed the system's commitment, stating, "Legacy remains committed to serving our Health Share of Oregon Medicaid members and will identify a new administrative partner for 2026." A PacificSource representative added, "This transition should not disrupt any members’ provider relationships or continuity of care."
Background: Legacy Health and PacificSource
Legacy Health, one of Oregon's largest health systems, has a significant financial stake in PacificSource. In 2016, Legacy acquired a 50% ownership share for $247 million with the goal of creating a more integrated healthcare system. Legacy appoints a large number of PacificSource's board members. This relationship makes PacificSource's retreat from certain markets particularly noteworthy, especially as Legacy itself recently announced the closure of several clinics due to its own "significant financial pressures."
A Strategic Retreat Amid Financial Strain
While PacificSource is pulling back from major Medicaid markets, it is not completely exiting the program. The insurer plans to continue offering Oregon Health Plan coverage in other parts of the state, including Marion and Polk Counties. It will also maintain its commercial insurance plans available on the open market.
The company's actions reflect a broader trend of financial strain within the healthcare industry. The combination of rising operational costs and contested government funding levels is forcing providers and insurers to make difficult business decisions.
The partial withdrawal from Medicaid allows PacificSource to reduce its exposure to less profitable sectors while focusing on its commercial offerings and remaining government contracts. However, for the more than 110,000 Oregonians who now need to navigate a change in their health coverage, the transition marks a period of uncertainty.
