The Trump administration announced Tuesday it will end a key subsidy program for Medicare Part D, the federal prescription drug benefit, effective in 2027. Centers for Medicare & Medicaid Services Administrator Mehmet Oz stated the program benefits corporate insurance companies and that ending it will stabilize the market.
Meditare Part D provides prescription drug coverage to tens of millions of older and disabled Americans. The current subsidies are set to expire at the end of this year, with the changes impacting enrollees in 2027. Administration officials indicated that beneficiaries will be informed of new monthly costs later this fall.
According to KFF, a health policy nonprofit, the government currently pays billions of dollars annually to insurance companies to maintain an average monthly premium of $36 per person. Officials suggest that while some recipients may see an increase of up to $20 per month, about half of enrollees will experience a premium increase of less than $10, or even a decrease, with most retaining plans at $10 or less. Oz stated on X that "premiums will go up by less than $10 for most Medicare recipients, with many even seeing LOWER premiums."
The administration also stated that beneficiaries will continue to have access to low-cost plans and that efforts to lower prescription drug prices will persist, citing "most favored nation" deals and a policy to provide seniors access to GLP-1 medications for $50 per month.
The move comes as the expiration of Affordable Care Act subsidies has also become a significant issue for voters ahead of midterm elections, impacting out-of-pocket healthcare costs. Trump administration officials have criticized the Biden administration's Inflation Reduction Act, alleging it provided financial benefits to major insurance companies and contributed to rising premiums. Biden administration officials, meanwhile, have highlighted the Inflation Reduction Act's provisions for allowing government negotiation on the pricing of certain high-cost drugs.
The decision to end the Medicare Part D subsidy program was first reported by The Wall Street Journal.