The Trump administration has announced plans to discontinue a federal subsidy programme designed to help keep Medicare prescription drug plan premiums stable after the 2026 plan year.
The decision was announced on Tuesday by the Centers for Medicare & Medicaid Services (CMS), which said insurers now have enough experience managing Medicare Part D plans to set accurate prices without government financial support.
According to the agency, its review of insurers’ 2027 bids showed the market had become stable enough to operate without the subsidy programme.
“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 provides prescription drug coverage to millions of older Americans through private insurance providers and remains a major component of the federal Medicare programme.
Healthcare costs continue to be a significant concern for many retirees living on fixed incomes. According to health policy organisation KFF, nearly 25 million people were enrolled in standalone Medicare Part D prescription drug plans in 2026.
The move comes as the Trump administration continues to pursue wider reforms across federal healthcare programmes, including proposals to revise Medicare physician payment systems and tighten oversight of government healthcare spending.
CMS also released preliminary details of the 2027 Medicare prescription drug plan bids.
The agency said the national average monthly bid amount, which is used to determine government subsidies for participating plans, will be $296.05 in 2027.
It added that the national base beneficiary premium for Medicare Part D will be $41.33 next year.
CMS noted that annual increases to the base premium will remain capped at 6 per cent through 2029 under provisions of the Inflation Reduction Act
