The Trump administration will end a subsidy program, meant to keep premiums stable for Medicare prescription drug plans, after 2026, the Centers for Medicare & Medicaid Services said on Tuesday.
The agency said its review of 2027 bids showed insurers have gained enough experience with Medicare Part D to accurately price their plans without support from the program.
“We are stabilizing the market so this bailout is no longer needed. Premiums will go up by less than $10 for most Medicare recipients, with many even seeing lower premiums,” CMS Administrator Dr. Mehmet Oz said in a post on X.
Medicare Part D, which provides prescription drug coverage to millions of beneficiaries through private insurance plans, is a key component of the federal health program for older adults.
Healthcare costs remain a concern for many older Americans on fixed incomes. Nearly 25 million people were enrolled in standalone Medicare Part D drug plans in 2026, according to KFF, a health policy research group.
Major Medicare Part D insurers include UnitedHealth Group (UNH.N), opens new tab, Humana (HUM.N), opens new tab and CVS Health’s (CVS.N), opens new tab Aetna.
The Wall Street Journal first reported the development earlier in the day.
The decision comes as the Trump administration pursues broader changes to government health programs, including a proposal to overhaul Medicare physician payments and increase oversight of federal healthcare spending.
CMS also released preliminary information on 2027 Medicare drug-plan bids. The national average monthly bid amount, a measure used to calculate government subsidies for plans, will be $296.05 in 2027.
The agency said the national base beneficiary premium for Medicare Part D will be $41.33 next year. Annual increases in that premium remain capped at 6% through 2029 under provisions of the Inflation Reduction Act.
CMS said it will release final 2027 Medicare Advantage and Part D premiums and plan details in September.
