Trump administration plans to end Medicare Part D subsidy program in 2027

What This is

• Centers for Medicare & Medicaid services (CMS) says it will end a temporary Medicare Part D premium subsidy that started in 2024 and will not continue it into 2027.
• The subsidy applies to Medicare Part D prescription drug coverage, especially stand-alone Part D plans used by about 25 million enrollees.
• CMS argues the payments mainly benefited insurers, are no longer needed for pricing, and ending them will save billions in taxpayer dollars and help stabilize the market.
• The program lowered premiums by roughly $16 on average and cost CMS about $3.6 billion in 2026, with some reports putting total costs around $9.8 billion across 2025–26.
• CMS says most people affected will see monthly Part D premiums rise by less than $10 in 2027, though some could see larger increases and a few could see decreases.
• Analysts and health policy experts warn some beneficiaries could see increases closer to $20 a month and that higher premiums could affect enrollment choices.
• CMS says ending the subsidy does not change Medicare’s new annual out-of-pocket cap for prescription drugs.
• CMS released early 2027 pricing indicators, including a base beneficiary premium of $41.33, and says more details will come later, including in September.

Why This Matters

• Even modest monthly premium increases add up for retirees and disabled people on fixed incomes.
• Higher Part D premiums can change which drug plan people choose, and may push some toward Medicare Advantage plans that bundle drug coverage.
• The decision shifts costs between taxpayers, insurers, and beneficiaries, raising fairness questions about who should pay to keep premiums stable.
• It also tests trust in Medicare’s promises, because many people plan their budgets around stable, predictable health costs.