The expiration of a Biden-era Medicare Part D subsidy program will end extra financial support for about 23 million seniors, leaving millions facing higher monthly prescription drug costs starting next year, according to the Centers for Medicare and Medicaid Services and healthcare policy experts. The decision to phase out the program diverges from the Trump administration’s broader messaging on reducing healthcare expenses.
Medicare Part D Subsidies Set to Expire After Cost Concerns
The temporary Medicare Part D subsidies will officially end when they expire, according to announcements from the Centers for Medicare and Medicaid Services (CMS). Created in 2024 to mitigate the financial impacts of the 2022 Inflation Reduction Act, the subsidy program was initially slated to run for at least three years. However, that window is closing a year early. Juliette Cubanski, vice president and director of the Program on Medicare Policy at KFF, told The Hill that the move undercuts administration claims about lowering expenses. “President Trump has had a lot of strong rhetoric on drug prices and negotiating deals with manufacturers to lower prices, and they’ve taken a lot of different steps to try to bring drug prices down,” Cubanski said. “But it’s also true that this move to end these extra premium subsidies for some Medicare drug plans cuts in the other direction because it could translate to higher premium costs for millions of people with Medicare.”
Government Spending and Insurance Company Bailouts
Federal officials defended the cancellation by pointing to taxpayer costs and market stabilization. According to a Government Accountability Office report, the subsidy program cost a total of $9.8 billion across 2025 and 2026. CMS Administrator Dr. Mehmet Oz criticized the prior administration’s approach on social media, writing that “the Biden admin gave BILLIONS of taxpayer money DIRECTLY to Big Insurance Companies. This is unacceptable.” Oz added that the market has since stabilized, rendering the financial bailout unnecessary. “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,” Oz wrote. Conversely, Leslie Dach, founder and chair of Protect our Care, argued that the claimed government savings are incremental compared to the real-world impact on patients. “This was a purposeful thing, and all these things are a choice they make,” Dach said.
Financial Impact on Seniors and Household Budgets
Policy analysts emphasize that even minor monthly increases compound household financial pressures. Cubanski noted that the average premium reduction driven by the subsidy program reached $16 a month in 2026, against an average standalone drug plan premium of $36 a month. Without the demonstration project, beneficiaries faced paying nearly 50 percent more for drug coverage. “At the end of the day, I think what matters to people is how much more or less they have at the end of the month after all their bills are paid,” Cubanski said. David Lipschutz, co-director of the Center for Medicare Advocacy, pointed out that cutting the program may steer more enrollees toward Medicare Advantage plans, which ultimately cost the federal Medicare program more money despite perceived short-term savings.
Did You Know?
Medicare Part D is optional insurance that helps cover brand-name and generic prescription drugs. It is offered through private insurance companies either as a standalone plan or as part of a bundled Medicare Advantage plan.
Frequently Asked Questions
When do the Medicare Part D subsidies end?
The Biden-era Medicare Part D subsidies will expire at the end of the year and will not be offered in 2027, according to CMS.
How much will Medicare Part D premiums change?
CMS states that for most beneficiaries, monthly premiums will go down, stay the same, or increase by less than $10. However, policy experts argue that ending the subsidy removes a vital cushion that kept baseline costs lower.
What was the total cost of the subsidy program?
According to a Government Accountability Office report, the subsidy program cost a total of $9.8 billion across 2025 and 2026.
What are your thoughts on these upcoming changes to Medicare Part D coverage? Share your perspective in the comments below or subscribe to our newsletter for ongoing updates on healthcare policy.
Related reading