Nicolai Haugsted
Trump’s Medicare overhaul takes another step as drug subsidy comes to an end.
Millions of older Americans could soon see changes to what they pay for prescription drug coverage after the Trump administration announced plans to phase out a federal subsidy program that has helped keep Medicare Part D premiums in check.
Federal officials argue the temporary support has fulfilled its purpose, while insurers are now considered capable of pricing their plans without additional government assistance.
According to Reuters, the Centers for Medicare & Medicaid Services (CMS) confirmed Tuesday that the stabilization program for Medicare Part D prescription drug plans will expire after the 2026 plan year.
According to the agency, its review of insurers’ 2027 bids showed that companies have gained enough experience with the current system to accurately calculate premiums without relying on the extra financial support.
CMS Administrator Dr. Mehmet Oz defended the decision in a post on X.
“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,” he wrote.
Millions rely on Medicare drug coverage
Medicare Part D provides prescription drug coverage through private insurance plans and serves as a key part of the federal healthcare program for older Americans.
Nearly 25 million people were enrolled in standalone Medicare Part D plans during 2026, according to health policy research group KFF.
Major insurers participating in the program include UnitedHealth Group, Humana and CVS Health’s Aetna.
Broader healthcare changes underway
The announcement comes as the Trump administration continues pursuing wider reforms to federal healthcare programs.
Among the proposals already under consideration are changes to Medicare physician payments and increased oversight of federal healthcare spending.
CMS also released preliminary figures for the 2027 Medicare drug plans.
The agency said the national average monthly bid amount used to calculate government subsidies will be $296.05 in 2027, while the national base beneficiary premium for Medicare Part D is expected to be $41.33 next year.
Annual premium increases will remain capped at 6% through 2029 under provisions included in the Inflation Reduction Act.
Final Medicare Advantage and Medicare Part D premiums, along with detailed plan information for 2027, are expected to be released by CMS in September.
