The Biden-era Medicare Part D subsidy program, which helped reduce monthly premiums for Medicare drug coverage, will end at the close of 2026 and will not be available in 2027, the Centers for Medicare and Medicaid Services (CMS) announced. This decision follows recent congressional moves to allow ObamaCare subsidies to expire.
President Trump has frequently promoted efforts to lower drug prices, including through the TrumpRx platform and "most-favored-nation" deals with pharmaceutical companies. However, healthcare advocacy groups warn that ending these subsidies could lead to higher premiums for millions of seniors, undermining the administration’s affordability message.
Juliette Cubanski, vice president and director of the Program on Medicare Policy at KFF, told The Hill, "President Trump has had a lot of strong rhetoric on drug prices and negotiating deals with manufacturers to lower prices, and they’ve taken a lot of different steps to try to bring drug prices down. But it’s also true that this move to end these extra premium subsidies for some Medicare drug plans cuts in the other direction because it could translate to higher premium costs for millions of people with Medicare."
In 2026, the subsidy program reduced premiums by an average of $16 per month, a significant amount considering the average standalone drug plan premium was $36 per month. Cubanski noted, "People might have had to pay nearly 50 percent more for drug coverage this year if the demonstration hadn’t been in place."
CMS responded to concerns by stating, "For most Medicare beneficiaries, premiums will go down, stay the same, or increase by less than $10." The agency added that over 85 percent of beneficiaries affected by the previous demonstration will have access to a Part D plan with either lower costs or an increase of less than $10 in premiums next year. CMS emphasized its focus on policies to lower drug costs rather than directing billions of dollars in subsidies to insurance companies.
Still, experts highlight the broader impact on seniors' household budgets already strained by rising costs in gas, housing, and food. Cubanski said, "If their prescription drug plan premiums are going to be up for 2027, that just kind of puts more pressure on household budgets that are already being squeezed."
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