The Trump administration has announced it will not renew a temporary subsidy program that helped stabilize premiums for Medicare Part D prescription drug plans. The decision, confirmed by Dr. Mehmet Oz, who oversees the Centers for Medicare and Medicaid Services (CMS), will end a $3.6 billion annual support program, potentially leading to higher costs for millions of seniors in 2027 .

The End of a Temporary Stabilization Program

The subsidies were created under the Biden administration as a "demonstration project" to ease the transition for insurers following changes from the 2022 Inflation Reduction Act. That legislation capped Medicare patients' out-of-pocket drug spending at $2,000 starting in 2025, shifting more of the cost burden onto insurers . The temporary subsidies were designed to prevent sharp premium increases while insurers adjusted to the new cost structure .

According to a Government Accountability Office report, the program provided approximately $9.8 billion in total support across 2025 and 2026 . Dr. Oz announced the program's termination on social media platform X, writing: "The Biden admin gave BILLIONS of taxpayer money DIRECTLY to Big Insurance Companies. This is unacceptable" .

An administration official told The Wall Street Journal that the subsidies were no longer necessary, arguing they actually created perverse incentives for insurers to raise premiums since the government would absorb much of the added cost . The official also noted that other measures aimed at keeping Medicare Part D costs in check remain in place .

Who Will Be Affected and By How Much?

The impact will be felt most acutely by the approximately 23 million people enrolled in standalone Medicare Part D prescription drug plans . While the administration contends the impact will be modest, independent analysts warn the increases could be substantial.

According to The Wall Street Journal, about 45% of enrollees could see monthly premium increases of $11 to $20, while another 30% may face increases of $10 or less** per month. Roughly **25%** of beneficiaries would see their premiums remain unchanged or decline . However, Juliette Cubanski, vice president and director of the Program on Medicare Policy at KFF, notes that the average premium for standalone drug plans was about **$36 per month before the subsidy .

"This year, the subsidies reduced the average drug plan premium by $16," Cubanski told NPR. "That might not sound like a lot of money to some people. To put it in context, the average premium now is $36. So people might have had to pay nearly 50% more for drug coverage this year without this demonstration" . With the subsidies ending, the actual premium increase will depend on final rates released by CMS in the fall .

Potential Consequences: Shifting to Medicare Advantage?

Healthcare policy experts warn the decision could accelerate a shift away from traditional Medicare toward Medicare Advantage plans, which may have unintended consequences . Stacie Dusetzina, a professor of health policy at Vanderbilt University, notes that the subsidies have been most helpful for standalone Medicare drug plans, which are more exposed to premium fluctuations than Medicare Advantage plans .

"Project 2025 was pretty blunt about wanting to push more people into Medicare Advantage," Dusetzina told NPR, referring to the Heritage Foundation's blueprint for a second Trump presidency. "One way to really accelerate that is to make it very expensive to stay in traditional Medicare" .

While Medicare Advantage plans may offer lower premiums, they often come with tradeoffs—including a more limited network of providers and hospitals that accept the coverage . "That also requires you to think pretty far in advance about your long-term health needs," Dusetzina warned .

The Part D Program and Current Landscape

Medicare Part D provides prescription drug coverage through private insurance plans and is a critical component of the federal health program for seniors . Over the past two years, the market has seen significant contraction, with the number of available drug plans offered dropping by about half .

The administration's decision comes amid broader efforts to reshape healthcare policy. A notable related development is a potential five-year pilot program to allow Part D plans to cover GLP-1 drugs like Ozempic and Wegovy for weight management, which could dramatically expand access to these popular but expensive medications .