Millions of older adults on Medicare prescription drug coverage could face steeper monthly costs in 2027, after the Trump administration concludes a temporary subsidy program that has helped offset premiums for the past two years.
The Centers for Medicare & Medicaid Services (CMS) this week announced it would wind down the Part D Premium Stabilization Demonstration, a program initially implemented by the Biden administration in 2024 to lower patients’ Medicare Part D costs in response to the 2022 Inflation Reduction Act. The subsidies were designed to help insurers absorb the cost of the law’s new out-of-pocket cap for standalone drug plans.
CMS Administrator Dr. Mehmet Oz said ending the subsidy would prevent billions of taxpayer dollars from being funneled to insurance companies. The program cost the agency an estimated $3.6 billion in 2026, according to a Government Accountability Office report. Oz said most Medicare beneficiaries would see an increase of less than $10 per month, and some would see lower premiums. “Every Medicare beneficiary still has access to low-cost plans, and we will continue to lower prescription drug prices for every American patient,” he wrote on social media.
Democrats immediately seized on the decision. “The Trump administration is actively raising prescription drug costs for 25 million seniors,” Senate Minority Leader Chuck Schumer wrote on X, calling the move “heartless, cruel, and completely by choice.” The news was first reported by The Wall Street Journal.
The roughly 25 million Americans with Medicare Part D plans will learn their 2027 rates in the fall, as they cast ballots in November’s midterm elections. Part D beneficiaries paid an average of $36 per month this year with the subsidies in place, according to the healthcare research nonprofit KFF, and the subsidies offset the average premium by $16 in 2026, according to the Medicare Payment Advisory Commission.
The decision does not affect the out-of-pocket cap that limits what older adults with standalone drug coverage spend each year. That cap is $2,100 in 2026 and is projected to rise to $2,400 in 2027. CMS has said it will release information about next year’s premiums in September.
AARP Executive Vice President Nancy LeaMond said her organization had supported the temporary subsidy. “While it’s too early to know the full impact of this change, it would be unfortunate if this decision made Part D coverage less affordable, just as we’re beginning to see billions in savings from Medicare drug price negotiation,” she said.
Juliette Cubanski, vice president and director of Medicare policy at KFF, warned the increases could pinch retirees on fixed incomes. “What’s going to matter most for consumers is how much more or less they have to pay at the end of a month, and how much they have left after the bills are paid,” she said. “This could just make it more challenging for some people to make that math work.”
The change lands in a high-stakes election year in which voters have identified the cost of living as a top concern. Seniors can shop for new plans during open enrollment from October 15 through December 7, and low-income enrollees may qualify for Extra Help with premiums and drug costs.
Sources: AP News, CMS Fact Sheet, AOL
Author: USA Desk
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