The administration of US President Donald Trump plans to end a subsidy program that has helped keep Medicare Part D prescription drug premiums lower, according to a report by The Wall Street Journal.
The subsidy program provides insurers with an estimated $3.6 billion in subsidies this year and is set to expire after 2026, the report said. Mehmet Oz, administrator of the Centers for Medicare and Medicaid Services, stated: "We are stabilizing the market so this bailout is no longer needed."
$3.6 billion
Annual subsidy to insurers under the Medicare Part D program, set to expire after 2026.
About 25 million Part D beneficiaries will learn their 2027 premiums this fall. An administration official estimated that 25% of enrollees will see premiums stay the same or decrease in 2027, while about 30% will pay less than $10 more per month. Most of the remaining 45% are expected to face increases of $11 to $20 monthly, although lower-cost plans will still be available for those who switch.
According to a Government Accountability Office report, the subsidy program has pumped an estimated $9.8 billion into the market, with $6.2 billion in 2025 and $3.6 billion in 2026. Millions of older Americans could pay more for their prescription drug coverage next year, as the change affects 2027 premiums.
We are stabilizing the market so this bailout is no longer needed.
— Mehmet Oz, administrator of the Centers for Medicare and Medicaid Services
Updates
The temporary subsidy being terminated reduced monthly Medicare premiums by an average of $16, with insurance companies receiving notification of the cut late Tuesday. Industry representatives, including those from AHIP and UnitedHealthcare, are currently reviewing the decision's impact on coverage affordability. Meanwhile, KFF Medicare policy director Juliette Cubanski warned that beneficiaries could face steep premium hikes in 2027, potentially driving increased enrollment in privatized plans.
The temporary subsidy being terminated reduced monthly Medicare premiums by an average of $16. Insurance companies were first notified about the program's curtailment late Tuesday, prompting industry trade group AHIP to state they are closely reviewing the cut. Experts warn that without this support in 2027, beneficiaries could face relatively steep premium increases, potentially accelerating a shift toward privatized plans.
The temporary subsidy being terminated reduced monthly Medicare premiums by an average of $16, with insurance companies receiving notification of the cut late Tuesday. Industry representatives, including those from AHIP and UnitedHealthcare, have indicated they are currently reviewing the decision or working to ensure access to affordable medication. Additionally, KFF expert Juliette Cubanski warned that the lack of financial support for 2027 could lead to relatively steep premium increases and may accelerate a shift toward privatized plans.
The temporary subsidy being terminated reduced monthly Medicare premiums by an average of $16. The Centers for Medicare and Medicaid Services stated that the program is ending because plan sponsors have gained sufficient experience to develop future bids independently. Meanwhile, insurance providers were only notified of this curtailment late Tuesday, prompting industry groups to begin reviewing the potential impact on consumer costs.
