Memorial Hermann Exits Employer-Focused Insurance Lines Amid Industry Challenges
Add Memorial Hermann to the list of health systems cutting their insurance lines “given the ongoing headwinds facing the health insurance industry.”
The system’s southeast Texas insurance subsidiary, Memorial Hermann Health Plan, has notified brokers, employers, and providers that it plans to discontinue and close its employer-focused offerings.
Plan Details and Transition
The affected plans include Memorial Hermann Commercial Health Plan, a health maintenance organization (HMO); Memorial Hermann Insurance Company, a preferred provider organization (PPO); and Memorial Hermann Health Solutions, a third-party administrator of self-funded health plans.
In notices sent out, Memorial Hermann affirmed its commitment to honoring obligations under existing policies until their expiration date. Groups due for renewal before December 1 will have the opportunity to enroll in a final year of coverage. The company also stated it would consider all proposals with an effective date on or before August 1st, having stopped publishing new business proposals on May 18th.
Continuing Medicare Offerings
Notably, Memorial Hermann’s Medicare Advantage HMO, which had more than 14,000 members as of January according to the Centers for Medicare and Medicaid Services, is not affected by these changes.
Financial Context
While Memorial Hermann does not publicly disclose the number of members in its employer-directed plans, financial documents reveal that the system collected premium income totaling $193.5 million in fiscal year 2025 (ended June 30, 2025) and $181.7 million in the nine months ended March 31, 2026. During the same periods, the system reported total revenues of approximately $84 billion and $7.2 billion, respectively.
Strategic Decisions and Industry Trends
Memorial Hermann Health Plan stated in its announcements that the decision was made “after a careful and comprehensive assessment of the system’s assets and resources, including an assessment of existing opportunities and future challenges in light of ongoing pressures on health system-owned health plans.” Achieving sufficient scale to remain sustainable proved “difficult.”
Operating an insurance plan can provide health systems a buffer against declines in service delivery and unfavorable rates, while potentially boosting traffic to their services. However, the challenging economic environment has led other major players to reduce their insurance operations.
Broader Industry Movements
In Texas, Baylor Scott & White recently announced its exit from individual marketplaces and Medicaid. On the West Coast, Providence began the year searching for a buyer for its Providence Health Plan business, but pivoted in May to begin winding down “most” of its insurance lines, including individual and employer group/commercial plans.
This trend reflects the broader challenges health systems face, balancing service delivery with financial sustainability in a rapidly changing health insurance landscape.
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