CALPERS HOLDS HEALTH PREMIUM INCREASE TO 4.97% FOR 2027 WHILE ADVANCING CARE QUALITY

The following information was released by the California Public Employees' Retirement System (CalPERS):

2027 rates reflect CalPERS' decision to transition from UnitedHealthcare Basic plans and add Sutter Health Plan.

SACRAMENTO, Calif. CalPERS announced 2027 health plan premium rates today, keeping the overall weighted rate change to 4.97% while continuing to improve care quality for members.

This year's rates continue a three-year trend of lower year-over-year increases, and a significant improvement over 2026, when CalPERS rates rose by 8.21%. The increase is also lower than commercial healthcare inflation trends, which are expected to rise 9% in 2027, according to research from PwC.

"These rates reflect CalPERS' methodical approach to purchasing health coverage and holding plans accountable for cost and performance, rather than simply accepting the rates proposed by carriers," said CEO Marcie Frost. "Our team has pushed to get the most competitive premiums possible for members while advancing better care across the program."

The average rate change for each group is as follows: Basic (non-Medicare) plans, 5.78%; Basic health maintenance organization (HMO) plans, 4.49%; Basic preferred provider organization (PPO) plans, 7.34%; and Medicare plans, 0.51% overall.

Prioritizing Access to Affordable Coverage

CalPERS was able to secure competitive premiums because of its comprehensive rate development process and holding health plans accountable for managing costs.

After conducting independent examinations of cost and utilization data, CalPERS did not renew its Basic (non-Medicare) contract with UnitedHealthcare due to their high and unjustified 2027 rate increases. UnitedHealthcare's proposed rate increase for Alliance was 23%, which was over three times CalPERS' projection. For Harmony, CalPERS projection showed no increase, while UnitedHealthcare proposed a 21% premium increase. If accepted, UnitedHealthcare's proposed rates would have added an additional $167 million in premiums paid by members and employers.

With the exit of UnitedHealthcare's Basic plans, CalPERS is proud to offer Sutter Health Plan as a new HMO option in 2027. This integrated health plan offers members coordinated care across clinicians and hospitals and receives high ratings on quality and service through the National Committee for Quality Assurance. This new partnership contains the same strong terms and conditions across all HMO plans and demonstrates that more affordable options can be provided while prioritizing access to quality care.

"Members are feeling the impact of rising healthcare costs, and the national outlook makes clear that pressure isn't going away," said Ramn Rubalcava, chair of the Pension and Health Benefits Committee. "That's why CalPERS is focused on providing health benefits that offer affordable options and consistent value for our members in an unpredictable healthcare environment."

"Our responsibility is to protect affordability and access for the people who depend on our health benefits," Chief Health Director Don Moulds said. "We are grateful to work with plans that prioritize affordability and help us deliver value for our members over the long term."

Improving Quality

CalPERS is also using its purchasing power to help members get better care across its health program. Through its Quality Alignment Measure Set, CalPERS ties financial incentives to evidence-based medical interventions that prevent illness and save lives.

Already, 91% of CalPERS members are enrolled in plans showing improving scores across the quality measures. In 2024, $64 million was at risk under the quality incentive structure for CalPERS health plans, and that amount will increase to a maximum of 4% of total gross premium per plan by 2027. Improvements in these measures can have a real impact for members by helping prevent illness and improve outcomes.

"Our goal is to continuously improve the quality of care our members receive," said Dr. Julia Logan, Chief Medical Officer. "By aligning financial incentives with better outcomes, we're encouraging health plans to focus on the care that makes the greatest difference for members' health and well-being."

2027 Premium and Program Changes

CalPERS also approved the addition of benefit changes and service area expansions for 2027, including:

A family-building benefit, including coverage for in-vitro fertilization, across all Basic HMO and PPO plans, effective July 1, 2027.

The expansion of Kaiser Permanente's Basic and Medicare plans into six counties in northwestern Nevada.

The expansion of Blue Shield of California's EPO plan into eight counties.

The following tables represent the percentage premium change for each health plan between 2026 and 2027 based on the state, single-party premium.

CalPERS members are encouraged to shop health plans and make changes during Open Enrollment, which runs September 14 through October 9. Beginning September 8, members can find Open Enrollment information on the CalPERS website, and customized information in their myCalPERS accounts. Using the Search Health Plans tool in myCalPERS, members can compare plan monthly premiums and copays, and search for primary care doctors and specialists to see which plan works best for them. Premiums will take effect January 1, 2027.

About CalPERS

With more than 1.5 million members, CalPERS is the largest purchaser of public employee health benefits in California and the second largest public purchaser in the nation after the federal government. In 2025, we spent over $13.9 billion to purchase health benefits for active and retired members and their families on behalf of the State of California (including the California State University system) and nearly 1,200 public agencies and schools.