The Trump administration's decision to terminate a Medicare Part D subsidy program could lead to higher monthly premiums for millions of seniors, a move that appears to contradict the president's repeated pledges to lower drug costs. The program, established under the Biden administration, provided temporary financial support to help stabilize premiums for standalone drug plans.
President Trump has frequently highlighted his administration's efforts to reduce prescription drug prices, including the TrumpRx platform and pursuing "most-favored-nation" pricing agreements with pharmaceutical companies. However, healthcare advocates and policy experts argue that ending the subsidy will impose new financial burdens on older Americans already struggling with high costs.
Juliette Cubanski, vice president and director of the Program on Medicare Policy at KFF, noted the tension between the administration's rhetoric and its actions. "President Trump has had a lot of strong rhetoric on drug prices and negotiating deals with manufacturers to lower prices, and they've taken a lot of different steps to try to bring drug prices down," she said. "But it's also true that this move to end these extra premium subsidies for some Medicare drug plans cuts in the other direction because it could translate to higher premium costs for millions of people with Medicare."
The Centers for Medicare and Medicaid Services (CMS) announced that the Biden-era Part D subsidies will expire at the end of this year and will not be available in 2027. This follows the expiration of enhanced ObamaCare subsidies, which Republicans in Congress allowed to lapse earlier this year. The decision comes just three months before the midterm elections, where affordability is a central campaign issue.
Medicare Part D is a voluntary program that helps cover prescription drugs, offered through private insurers either as standalone plans or as part of Medicare Advantage. The Biden administration restructured the program to include a $2,000 annual cap on out-of-pocket drug costs and allowed Medicare to negotiate prices for certain high-cost medications.
CMS has stated that new premium estimates for 2027 will not be released until late September. The national average monthly bid amount for Part D plans is projected to rise to $296.05, up from $239.27 in 2026. The subsidy program, which cost $9.8 billion over 2025 and 2026, benefited approximately 23 million people enrolled in standalone plans.
CMS Administrator Dr. Mehmet Oz defended the decision on social media, arguing that the subsidies were a wasteful "bailout" to insurance companies. "The Biden admin gave BILLIONS of taxpayer money DIRECTLY to Big Insurance Companies. This is unacceptable," he wrote. He added, "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."
Critics, however, question the administration's justification. Leslie Dach, founder and chair of Protect our Care, called the move a deliberate choice that prioritizes budget savings over senior health. "This was a purposeful thing, and all these things are a choice they make," she said. "It'd be like this costs $5 billion a year, you know, the war is costing us $100 billion, and so this is a choice they've made. It's not fiscal responsibility."
David Lipschutz, co-director of the Center for Medicare Advocacy, expressed skepticism about the timing and rationale. He noted that the termination could push more beneficiaries toward Medicare Advantage plans, which the administration has favored, even though those plans "end up costing the Medicare program more." He suggested the administration might tout the savings as part of its anti-waste agenda, but said the impact on seniors would be significant.
A CMS spokesperson reiterated that the subsidies were intended to be temporary, and pointed to data showing that most beneficiaries will see modest premium changes. "We understand that outside organizations without plan bid information have voiced concerns, however our data shows that plan bids have stabilized; among the roughly quarter of Medicare beneficiaries enrolled in plans the previous demo impacted, over 85 percent of beneficiaries will have access to a Part D plan that is either lower cost or less than a $10 increase next year," the spokesperson said.
Cubanski countered that the program had a meaningful impact, noting that in 2026, the average premium reduction was $16 per month, which is nearly half of the average standalone premium of $36. "At the end of the day, I think what matters to people is how much more or less they have at the end of the month after all their bills are paid," she said. "If their prescription drug plan premiums are going to be up for 2027, that just kind of cuts against the message of affordability."
This development comes amid broader political battles over healthcare costs, including Democrats seizing on other administration controversies to criticize the White House. The decision also follows Trump's threats to revive a compensation fund as his attorney general nominee faces a tough confirmation, highlighting the administration's focus on cutting federal spending.
