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Oregon’s Medicaid insurers paid out considerably more per member in 2024 than they did in 2023, according to an analysis the state made public Friday, adding to the steady drumbeat of evidence that health care costs in various arenas have recently been rising far faster than Oregon’s 3.4% annual target.
Funded by a combination of federal and state dollars, the Medicaid insurers—known as “coordinated care organizations”—manage cost-free health insurance for most of the roughly 1.4 million Oregonians on the Oregon Health Plan.
Some insurers have reported severe budget strain lately, and the newly public report from the Oregon Health Authority offers fresh insight into their finances.
CCO expenditures per member grew by more than 10% between 2023 and 2024, the state found. For context, from 2023 to 2024, the state increased the average per-member rates it paid CCOs by 3.4%.
The result in 2024 documented what the state called a “mixed” financial picture. The insurers on average barely broke even. Some lost money while others made money. Overall, the average 0.0% income was CCOs’ worst financial performance since 2017, when they averaged net incomes of -0.3%. The CCOs, the report adds, “continue to face revenue challenges” in 2025.
Taxpayer funds—and potentially, the quality of Oregonians’ Medicaid coverage—hang in the balance. The state legislature already earlier this year kicked in an extra $30 million to boost CCO rates, the OHA noted.
But the insurers say they need far more to operate. In August, when the Oregon Health Authority proposed a major 6.8% per member rate increase for 2026. CCOs balked, and the state came back with a better offer of 10.2%—a tweak the OHA estimates would require $147 million in funds beyond that the state legislature had budgeted for.
CCOs had until Thursday to decide whether to accept the new rate proposals. All did except one, OHA spokesperson Amy Bacher tells WW. The insurer, PacificSource, declined to take the state’s 2026 contract in Lane County, which encompasses Eugene.
“However,” Bacher added in an email, “there is a process for ensuring that members maintain CCO coverage and we will be working through those steps in the coming months. Providers, community members and OHP members can be assured that there will be no immediate changes to benefits.”
The Lund Report earlier reported that PacificSource was mulling rejecting the Lane County contract.
Driven by a range of factors, costs have been rising far faster than inflation across the healthcare space, experts say.
The state said cost increases within the Oregon Health Plan reflected, in large part, the fact that more members were receiving care for mental health or substance abuse problems—as well as the fact that the price tag for that care was higher. In an effort to improve behavioral health, Oregon in 2022 increased Medicaid reimbursement rates for such services by an average of 30%.
“The mixed financial performance that CCOs experienced in 2024 happened for a good reason—more Medicaid members received the behavioral health care they need and Oregon behavioral health professionals were paid more for providing essential services after years of historic underfunding,” said OHA Chief Financial Officer Rochelle Layton, in a statement included in the Friday afternoon press release.
“OHA is committed to partnering with CCOs to ensure they are both financially sound and can continue to help Oregon Medicaid members access the quality health care they need and deserve.”
Budget shortfalls have already produced concrete effects. In recent months, for example, CareOregon, the largest Portland area Medicaid insurer, laid off dozens of staff, and announced new restrictions for its behavioral health coverage, enraging some mental health providers and patients. As it examines its operations, CareOregon has moved to bring in the high-powered management consulting firm McKinsey & Co.
