Most seniors with Medicare Part D prescription drug plans (PDPs) will pay more for medicine next year after the Trump administration’s July 28 announcement to end temporary subsidies for those plans.
Journalists can cover this story now Medicare beneficiaries are already concerned about rising costs, especially for health insurance and prescription drugs. The story will become more timely starting Oct. 15, when the 23 million seniors with PDPs can choose new plans for 2027. The announcement does not affect seniors enrolled in Medicare Advantage (MA) plans under Medicare Part C.
Reporters also can track another angle to this story: whether and how much effort the Trump administration and the federal Centers for Medicare and Medicaid Services will move Medicare members into MA plans, as Joyce Frieden reported for MedPage Today. The conservative Heritage Foundation’s blueprint for the Trump administration, Project 2025, has called for making MA the default enrollment option for all seniors when they turn 65, as Tara Bannow reported for STAT News in March.
For drug plan subsidies: $9.8 billion
In its July 28 announcement, CMS said it would end those subsidies to health insurers, which totaled $9.8 billion over two years (2025 and 2026), according to the federal Government Accountability Office. Insurers used those subsidies to reduce seniors’ monthly PDP premiums, explained Juliette Cubanski, vice president and director of the Program on Medicare Policy at KFF.
PDPs are the prescription drug insurance plans for seniors enrolled in traditional Medicare. Seniors in Medicare Advantage can get prescription drug coverage ( MA-PD plans) through Medicare Part C plans.
75% of PDP enrollees will pay more
Without the subsidies, about 45% of PDP enrollees would pay $11 to $20 more each month, 30% would pay more but less than $10 each month, and 25% would get no increase or their monthly premiums would decline, Anna Wilde Mathews reported for The Wall Street Journal.
Such increases would be 30% to 60% above the current average monthly PDP premium of $36 each month, John Wilkerson wrote for STAT News. The subsidies were established in 2024 in a temporary CMS demonstration program, he added.
CMS designed the program to stabilize enrollment and monthly premiums while the agency made changes to the Medicare Part D program included in the Inflation Reduction Act of 2022, Cubanski explained. At the time, the program was scheduled to run through 2027, but CMS ended the program a year early.
That law capped out-of-pocket drug spending for Part D enrollees and shifted more costs to health insurers that operate Part D plans, Cubanski added. The result was higher costs for health insurers offering PDPs, she noted.
Health insurers now have enough experience to propose actuarially sound bids for PDPs, CMS explained on July 28. After insurers submit those bids, CMS will publish the final average premiums for PDPs and MA drug plans in September, the agency said.
For Cubanski, that explanation suggested that the extra financial assistance for PDP plans received is no longer needed, she said.
The story behind the story
There may be more to the story, however, according to Stacie B. Dusetzina, Ph.D., a health policy professor at the Vanderbilt University Medical Center and a member of the Medicare Payment Advisory Commission. The National Academy of Medicine elected Dusetzina to the academy in recognition of her work on prescription drug prices and access.
Ending the subsidies will increase what PDP members pay and may drive many of them to enroll in MA, Dusetzina told me in an interview.
“In general, this administration has been very interested in encouraging more enrollment into Medicare Advantage, and one of the easiest ways to do that is by making the premiums more attractive in Medicare Advantage than they are in traditional Medicare,” she said. One reason, she added, is that Project 2025 calls for making MA the default enrollment option for all seniors when they turn 65.
Resources
- A Medicare Drug Subsidy Is Ending—Here’s What Patients Should Know, Jessie M. Pines, Forbes, July 31, 2026
- The Trump administration is ending a Medicare drug subsidy program. Here’s how it could affect costs, Ali Swenson, AP, July 31, 2026
- The Trump administration’s move to end subsidies for Medicare drug plans could cost consumers, Sydney Lupkin, NPR, July 29, 2026
- Administration Exploring Default Enrollment into Medicare Advantage, Center for Medicare Advocacy, March 26, 2026.
- 5 Questions About the Idea of Default Enrollment into Medicare Advantage Plans, KFF, April 29, 2025.
