Trump administration to end Medicare Part D subsidy program in 2027
The Trump administration is ending a key health insurance subsidy program that aimed to keep premiums for seniors' prescription drug plans in check, claiming that it benefits corporate insurance companies, according to Centers for Medicare & Medicaid Services Administrator Mehmet Oz.
Medicare Part D -- the government health insurance program's prescription drug benefit -- is used by tens of millions of older or disabled beneficiaries.
The program's subsidies are set to expire at the end of the year, the administration announced Tuesday.
That move will likely result in higher prescription costs and increase premiums for about half of recipients, according to an administration official.
The changes are anticipated to happen in 2027 and enrollees will find out the new monthly cost later this fall, administration officials said.
Currently the government pays billions of dollars to insurance companies as a subsidy to keep prescription drug insurance at an average of $36 per person per month, according to KFF, a health policy nonprofit.
Ending the subsidies may increase premiums for some by as much as $20 a month, according to KFF.
The move comes as Affordable Care Act subsidies have expired and health care costs remain a top issue for voters ahead of the midterm elections. The ACA subsidies helped lower the out-of-pocket costs for monthly premiums for people who purchased health care through the health insurance marketplace.
Trump administration officials decried the Biden administration for signing the Inflation Reduction Act, which they allege bailed out major insurance companies and resulted in increased premiums for Americans. Trump officials also claim that billions of dollars were funneled to the companies through Biden’s signature legislation
At the time, Biden officials touted the Inflation Reduction Act for allowing the government to negotiate with drug companies about the pricing for some of their most expensive medicines.
"We are stabilizing the market so this bailout is no longer needed," Oz wrote in a post on X. "Premiums will go up by less than $10 for most Medicare recipients, with many even seeing LOWER premiums," he wrote.
"Every Medicare beneficiary still has access to low-cost plans, and we will continue to lower prescription drug prices for every American patient, from more MFN deals to our policy giving seniors access to GLP-1s for $50 a month," he added, referring to "most favored nation" deals under which pharmaceutical companies charge U.S. patients the same rate as they charge in other countries.
The news about the Medicare Part D subsidies ending was first reported by the Wall Street Journal.
About half of enrollees will either see a premium increase of less than $10 or a premium decrease and most will have plans available at $10 or less, according to a Trump administration official.
