Oregon Medicaid investments to preserve quality healthcare access pay off, but financial challenges remain
SALEM, Ore. – The financial stability of most local insurers that facilitate Medicaid benefits in Oregon – also known as coordinated care organizations, or CCOs – improved in 2025, according to new Oregon Health Authority (OHA) analysis. However, individual CCO operating margins varied last year and were collectively lower than historical averages.
The 16 CCOs that operated in Oregon last year earned a net operating profit of $67 million, resulting in an operating margin of 0.8% in 2025. The year before, the same CCOs nearly broke even with a smaller net profit of $129,000 and a profit margin of just 0.001%.
“While the overall financial picture for Oregon’s coordinated care organizations is varied, additional government financial support helped them make a small profit in 2025,” said OHA Chief Financial Officer Rochelle Layton. “OHA is committed to partnering with CCOs to ensure they can meet Medicaid members’ health needs far into the future.”
The vast majority of the approximately 1.4 million people in Oregon who are enrolled in Medicaid have their care managed by CCOs. Medicaid is a joint state-federal program that provides health coverage to adults with lower incomes, children, older adults, and people with disabilities. CCOs were established to lower the overall cost of healthcare through better outcomes and care.
Eleven CCOs operated at a net profit in 2025, while four had a net loss. That’s an improvement from 2024, when nine operated at a net profit and seven had a net loss.
Individual CCO financial performance in 2025 ranged from a high profit margin of 5.39% to a low negative margin of -3.42%. PacificSource Community Solutions did not renew their Medicaid contract in Lane County in 2025 due to financial losses. Another CCO, Trillium Community Health Plan, remains in Lane County and migrated former PacificSource members into their network. PacificSource continues to serve Medicaid members in other areas of the state.
Additional funding buoys CCOs
CCOs collectively spent 9.0% more in 2025 to cover services for their Medicaid members in comparison to the year before. As has long been the case, CCOs’ largest expense category in 2025 was hospital services, which made up 31.8% of all spending on member services. Increased use of mental health and substance use disorder services – which accounted for 22.5% of all member service costs in 2025 – also drove CCO spending.
CCOs fared better in 2025 because OHA was able to provide $149 million in additional funding, $30 million of which came from state general funds while the remaining $119 million came from federal funds. The Oregon Legislature approved the additional state funding in June 2025 as part of the regular budget process after it became clear continued increases in utilization were further straining CCO budgets. In total, this additional funding accounted for about 1.73% of all CCOs’ overall operating revenue last year.
OHA compensates CCOs in two ways: a flat monthly rate for each person whose benefits a CCO coordinates and an annual incentive bonus for improving care quality for CCO members. The monthly payments, also known as capitation rates, are updated annually.
OHA recognized CCOs were facing financial challenges while it was developing 2026 capitation rates last year. To protect quality healthcare access for the state’s Medicaid members, OHA increased 2026 CCO capitation rates by about 10%.
Looking to the future
To develop 2027 capitation rates, OHA is factoring in CCOs’ 2025 financial performance as well as their available financial and claims data for 2026. OHA will finalize 2027 capitation rates by the end of this year.
Preliminary data collected so far this year suggests most CCOs have experienced further financial improvements because of the higher rates they are receiving. Through March 31, 2026, CCOs collectively spent 88.4% of their total revenue on member services and 9.9% on administrative services, leaving a 1.7% profit margin.
Historically, Oregon CCOs have collectively had profit margins as high as 7.5% in 2014, when the Affordable Care Act expanded Medicaid eligibility criteria, and as low as -0.3% in 2017, when the eligibility of some Medicaid members was redetermined after OHA completed a comprehensive review of Oregon Medicaid enrollment.
###