The Trump administration is ending a Medicare drug subsidy program. Here’s how it could affect costs

NEW YORK (AP) — Millions of older adults on Medicare prescription drug coverage could face steeper monthly costs in 2027, after the Trump administration concludes a temporary subsidy program that has helped offset premiums for the past two years.

The Centers for Medicare & Medicaid Services this week announced it would wrap up the program, which was initially implemented by the Biden administration in 2024 to lower patients’ Medicare Part D prescription drug costs in response to effects of the 2022 Inflation Reduction Act.

While federal officials insist the financial impact on Medicare beneficiaries will be minimal, the decision opens the Republican-led administration to potential political consequences in a high-stakes midterm election year. Voters have identified cost of living as a top concern, and many older adults, who tend to vote in high numbers, are on fixed incomes where every dollar counts. The roughly 25 million Americans with Medicare Part D plans will find out about their 2027 rates in the fall, when they are casting ballots in November’s elections.

Democrats slammed CMS’s move as part of a pattern of federal attacks on healthcare affordability, alongside federal Medicaid cuts and the expiration of Affordable Care Act subsidies that had reduced premium costs for working-age Americans in that program.

“The Trump administration is actively raising prescription drug costs for 25 million seniors,” Senate Minority Leader Chuck Schumer wrote on X in response to the news, which was first reported by The Wall Street Journal. “Heartless, cruel, and completely by choice.”

CMS Administrator Dr. Mehmet Oz on Tuesday said ending the subsidy program would prevent billions of taxpayer dollars from being funneled to insurance companies. It cost the agency an estimated $3.6 billion in 2026.

He said most Medicare beneficiaries would see less than a $10-per-month increase, and some would even see lower premiums than beforehand.

“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 wrote on social media.

The federal government also negotiates directly with pharmaceutical companies to lower the prices of some of the most expensive drugs in Medicare, through a program created by Congress in 2022.

This week’s decision has no impact on the out-of-pocket cap that limits the amount that older adults with standalone Medicare drug coverage spend on their prescription drugs over the course of a year. That was set at $2,100 in 2026 and is projected to rise to $2,400 for 2027.

Part D beneficiaries paid an average of $36 a month this year for their prescription drug premiums with the subsidies in place, according to the healthcare research nonprofit KFF. The subsidies offset the average premium by $16 in 2026, according to the federal Medicare Payment Advisory Commission (MedPAC).

It’s not yet known how many Americans the change will effect, or how much more they’ll pay. Older Americans have the opportunity to shop for plans each year, and prices vary widely between them. CMS has said it will release information about next year’s premiums in September.

Juliette Cubanski, vice president and director of the program on Medicare policy at KFF, said the price increases may be marginal for some consumers but impactful for others when combined with higher prices in other areas, like groceries, gas and housing.

“What’s going to matter most for consumers is how much more or less they have to pay at the end of a month, and how much they have left after the bills are paid,” she said. “This could just make it more challenging for some people to make that math work.”