Trump Administration Ends $3.6 Billion Medicare Part D Subsidy

The Trump administration announced it will phase out a $3.6 billion subsidy program designed to stabilize premiums for Medicare Part D prescription drug plans starting in 2027. The Centers for Medicare & Medicaid Services (CMS) stated that insurers have gained enough experience to price plans accurately without federal support.

CMS Administrator Mehmet Oz characterized the program as a Biden-era bailout that benefited large insurance companies and encouraged higher pricing. The decision affects roughly 25 million beneficiaries. While the administration projects that most recipients will see monthly premium increases of less than $10 or even a decrease, other estimates suggest nearly 45% of enrollees could face hikes between $11 and $20.

The national base beneficiary premium for next year is set at $41.33, with annual increases capped at 6% through 2029 under the Inflation Reduction Act. Other existing provisions, including the $2,000 annual out-of-pocket cap and Medicare's price negotiation authority, will remain in place. Final 2027 premiums and plan details are expected to be released in September.

Industry representatives from America's Health Insurance Plans and UnitedHealthcare indicated they are reviewing the announcement and remain committed to maintaining affordable access to medicines.