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PacificSource announced 134 new layoffs this week, underscoring the Oregon company’s hasty retreat—and the broader tumult that is shaking the regional health insurance marketplace and contributing to soaring costs for the general public.
With the news, the total number of announced job cuts at PacificSource since summer 2025—when it reported 1,800 employees—rises past 600.
In a public notice, the Springfield-based health insurer said the layoffs were driven by its decision to reduce offerings and draw back on certain lines of its business.
A spokesperson for the insurer said the decisions are not made lightly. “The reality is the healthcare system is unsustainable: Costs continue to rise, access is inconsistent, and the experience often falls short of what people need and deserve. These are not abstract problems. They directly affect PacificSource’s ability to continue delivering reliable, high-quality coverage to the people who count on us.”
Largely controlled by Legacy Health, PacificSource has more than 400,000 Oregonians on its health insurance plans as of 2025. If its retreat since then is a warning sign, its hardly the only one flashing. In the past year alone, Portland-based Moda Health said it would cover a smaller geographic footprint. So did another insurer, Health Net. The Providence Health Plan, which made a disastrous attempt to outsource much of its work to Silicon Valley, has more recently said it would shut down entirely by year’s end.
Officials say the broad retreat is both a response to and a driver of higher prices. When Oregon regulators approved whopping 21% and 15% rate increases next year for Obamacare plans—KFF said that national median was 15%—they told state lawmakers the hikes were a response to several factors, including the end of federal enhanced tax credits, rapidly rising claims costs, reduced enrollment, and “diminished competition due to carriers leaving markets.”
Meanwhile, the Oregon Health Authority is planning to pay the companies that operate Medicaid hundreds of millions of dollars more in taxpayer funds next year—reflecting an average of 6.1% per-member increase the agency announced this week. Only by very recent standards of runaway health care cost inflation does that raise looks relatively tame.
Close observers believe the rising costs are plainly unsustainable—for households, employers and governments as a whole—and while the health care system is deeply entangled with federal policy, Oregon officials have ideas of their own. Former Gov. John Kitzhaber led a workgroup this summer that tried to identify ways to corral costs by streamlining administration and system complexity and more aggressively bringing stakeholders to the bargaining table.
Others want to move more radically, and centralize health benefits through a universal state health plan.
The latest PacificSource layoffs, set to take effect by the year’s end, affect offices in Portland, Bend, Salem and Springfield, according to the company’s public notice.
