The Trump administration announced Tuesday it will end a subsidy program that helped keep Medicare prescription drug premiums stable, effective at the close of 2026.
The Part D Premium Stabilization Demonstration, which gave insurers billions to hold down drug premiums, will end after this year
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The Trump administration announced Tuesday it will end a subsidy program that helped keep Medicare prescription drug premiums stable, effective at the close of 2026.
The Centers for Medicare & Medicaid Services said that after examining 2027 plan bids, it determined insurers were now capable of setting prices for their plans on their own, without the program's financial backing. CMS said it will discontinue the Part D Premium Stabilization Demonstration at the end of this year, returning the program to standard market conditions in 2027.
CMS Administrator Dr. Mehmet Oz said on social media Tuesday that the subsidies were no longer necessary. "We are stabilizing the market so this bailout is no longer needed. Premiums will go up by less than $10 for most Medicare recipients, with many even seeing lower premiums," Dr. Oz wrote.
The demonstration program covered 2025 and 2026, years during which Washington funneled billions of dollars to health insurers to prevent Medicare drug premiums from rising sharply. The program was created by the Biden administration ahead of the 2024 presidential election to offset premium increases that would have resulted from changes introduced by the Inflation Reduction Act, according to The New York Times.
How much individual beneficiaries will pay in 2027 remains unclear, as premiums vary across plans and enrollees will be able to shop for coverage during the fall open enrollment period. CMS said it expects to release final 2027 plan premiums in September.
CMS also released preliminary 2027 bid information Tuesday. The national average monthly bid amount — a figure that feeds into calculations for government plan subsidies — will come in at $296.05 for the coming year. The national base beneficiary premium for 2027 will be $41.33, CMS said. A provision of the Inflation Reduction Act limits how fast that premium can grow, holding annual increases to no more than 6% through 2029.
The announcement drew criticism from Democratic officials and health advocacy groups. Kendall Witmer, a spokeswoman for the Democratic National Committee, said in a statement that Republicans "are doing everything they can to make health care unaffordable for Americans, especially for seniors," according to the Times. AHIP, the main lobbying group for the insurance industry, said it was still assessing the news, with spokesman Chris Bond noting that carriers are committed to making Part D coverage as affordable as possible despite surging drug costs.
The decision comes as CMS has also been expanding Medicare drug coverage in other areas. Earlier this month, the agency launched a pilot program giving eligible Medicare beneficiaries access to certain weight loss drugs for $50 a month — the first time Medicare has covered those medications for weight loss.
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