CalPERS team presents preliminary 2026 health premiums for basic and Medicare plans

In a recent meeting of the CalPERS Board of Administration, key discussions centered around the preliminary health plan premiums for 2026, highlighting significant trends and changes that could impact California's public employees and retirees. The meeting, held on June 17, 2025, featured presentations from CalPERS team members, including Rob George Zombech, who outlined the annual health plan renewal strategy and the process for determining premiums.

The primary focus was on the breakdown of premiums into three components: medical services, pharmacy costs, and administrative fees. This structured approach aims to enhance transparency and improve CalPERS' negotiating position with health plans. The board discussed how premiums are calculated, emphasizing the importance of risk adjustment for basic plans, which allows for pricing based on benefit design rather than the health status of members.

For 2026, the average increase in basic HMO premiums is projected at 6.5%, while basic PPO premiums are expected to rise by about 12%. These trends align with broader California industry patterns, although CalPERS has noted that its medical claim costs are consistent with state trends. Notably, pharmacy costs are rising, particularly for diabetes treatments and chronic inflammatory conditions, reflecting national trends.

The meeting also addressed Medicare plans, where average premiums are anticipated to increase by over 7%. This rise is attributed to changes in subsidies from the Centers for Medicare & Medicaid Services (CMS) and the comprehensive nature of CalPERS benefits compared to other plans. The discussion highlighted that while some Medicare Advantage plans are seeing lower increases, others are experiencing significant hikes due to increased service utilization and legislative impacts.

Overall, CalPERS is projecting an overall premium increase of 8.21% for 2026, which represents a 2.6% improvement from the previous year. This meeting underscored the ongoing challenges and adjustments within the health plan landscape, as CalPERS continues to navigate the complexities of providing affordable and comprehensive health coverage for its members. The board is expected to finalize these premiums in the upcoming months, with further discussions on specific plans and their implications for public employees and retirees.