{"id":7488,"date":"2026-06-18T04:05:26","date_gmt":"2026-06-18T04:05:26","guid":{"rendered":"https:\/\/sandiegorelocationnews.com\/index.php\/2026\/06\/18\/calpers-prepares-to-drop-united-healthcare-over-high-premiums-opts-for-sutter-health\/"},"modified":"2026-06-18T04:05:26","modified_gmt":"2026-06-18T04:05:26","slug":"calpers-prepares-to-drop-united-healthcare-over-high-premiums-opts-for-sutter-health","status":"publish","type":"post","link":"https:\/\/sandiegorelocationnews.com\/index.php\/2026\/06\/18\/calpers-prepares-to-drop-united-healthcare-over-high-premiums-opts-for-sutter-health\/","title":{"rendered":"CalPERS prepares to drop United Healthcare over high premiums, opts for Sutter Health"},"content":{"rendered":"

California state workers are likely to lose access to United Healthcare plans next year as CalPERS prepares to switch to Sutter Health Plan after the insurance behemoth tried to substantially increase 2027 premiums for public employees.<\/p>

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Staff at the California Public Employees\u2019 Retirement System recommended Tuesday that the board drop United Healthcare plans after negotiations with the insurer over next year\u2019s premiums failed to yield lower rates.<\/p>

\u201cUnfortunately, UHC\u2019s basic plans came in with extremely high and unsubstantiated rate increases for 2027,\u201d Rob Jarzombek, the chief of CalPERS\u2019 Health Plan Research and Administration Division, told the board of administration during a Tuesday meeting.<\/p>

\u201cDespite negotiation, UHC was unwilling to bring rates down sufficiently,\u201d he said. Adding Sutter Health Plan to CalPERS\u2019 portfolio would minimize disruptions to state employees who make up the majority of those enrolled in United Healthcare\u2019s plans, he noted.<\/p>

During the board meeting, CalPERS\u2019 staff also presented preliminary premiums for health plans in 2027.<\/p>

Unreasonably high rate increases<\/h2>

United Healthcare offers two basic plans to public employees in California: Alliance, which joined CalPERS\u2019 portfolio in 2014 and Harmony, which joined in 2022.<\/p>

Staff said those plans had served CalPERS members well, but when United Healthcare proposed rate increases for the 2027 plans, those proposals were \u201cnot reasonable and not at all close to our projections,\u201d Jarzombek said. He added United Healthcare\u2019s rate increases would have equated to an additional $167 million that CalPERS members and employers would have had to pay in premiums next year.<\/p>

A spokesperson for United Healthcare declined to comment.<\/p>

A Sutter Health spokesperson said in a statement that Sutter Health Plan, which is a provider-sponsored health plan owned by Sutter Health, is aware of CalPERS\u2019 proposal to update its health plan offerings and that potential changes are subject to board approval.<\/p>

\u201cWe value our relationship with CalPERS and appreciate the opportunity to demonstrate how our integrated care model can support high-quality, coordinated care for members,\u201d the statement read.<\/p>

United Healthcare\u2019s Alliance plan is particularly popular among civil service employees in the Sacramento area because the state\u2019s contribution amount covers the premium cost for an individual member and is the only mid-priced plan that provides members access to the Sutter Health system. There are over 80,000 CalPERS members on this plan.<\/p>

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CalPERS staff recommended transitioning to Sutter Health Plan because it would have the least amount of impact on current members enrolled in United Healthcare plans since many of them would still be able to access providers within the Sutter Health system.<\/p>

Jarzombek acknowledged that there will be some disruptions that arise from the transition but said CalPERS staff would work to minimize their impact.<\/p>

This transition shows that \u201cCalPERS is an active purchaser and will move to protect members and employers from inappropriately high rate increases,\u201d Jarzombek said.<\/p>

\u201cAs hard as it is to go through another year of change, I think we\u2019re making the right choice,\u201d Yvonne Walker, a CalPERS board member, said Tuesday. \u201cIt is absolutely right to drop UHC and go to Sutter.\u201d<\/p>

None of the board members publicly expressed opposition to the proposed transition. CalPERS\u2019 board is likely to voted on the transition next month when staff make an official recommendation to transition from United Healthcare to Sutter Health Plan next year.<\/p>

2027 preliminary premiums<\/h2>

Also on Tuesday, CalPERS introduced preliminary premium rates for 2027, which showed smaller increases compared to previous years.<\/p>

\u201cThis year\u2019s premiums are a significant improvement on last year\u2019s and are a continuation of a three-year run for lower year-over-year increases,\u201d Jarzombek said.<\/p>

Based on initial data, he expected CalPERS premiums would be lower than national averages. In 2026, basic plans increased on average 7.8%. Next year, those plans are expected to increase on average by 5.8%.<\/p>