Medicare Part D prescription drug premiums set to surge after election

The Trump administration and congressional Republicans Tom Kean Jr., Chris Smith, and Jeff Van Drew of New Jersey, are ending a federal subsidy program that has kept Medicare Part D prescription drug premiums stable for about 25 million seniors, setting the stage for premium increases in January 2027.

Despite promises from the GOP politicians to “protect Medicare and Medicaid,” the changes will increase the cost of living, causing more people to face terrible choices.

The Centers for Medicare and Medicaid Services announced in July that it would terminate the Part D Premium Stabilization Demonstration at the end of 2026, returning the program to what the agency called “traditional market conditions”.

The Democratic subsidy program, launched in 2024 under President Joe Biden, provided billions in payments to insurers to offset premium volatility caused by the Inflation Reduction Act’s redesign of the Medicare drug benefit.

CMS Administrator Dr. Mehmet Oz framed the decision as a rejection of government intervention in the private insurance market.

“The Biden admin gave BILLIONS of taxpayer money DIRECTLY to Big Insurance Companies. This is unacceptable,” Oz said on social media. “We are stabilizing the market so this bailout is no longer needed”.

Sen. Pete Ricketts, R-Neb., echoed that sentiment, telling the Fairbury Journal News that the Inflation Reduction Act “triggered major cost spikes for seniors” that were “covered up by this temporary multi-billion-dollar subsidy program”.

“Republicans and this administration are working to make life more affordable,” Ricketts said.

Rep. Tom Kean Jr., who represents New Jersey’s 7th District, has aligned himself with the Republican Study Committee’s broader vision of restructuring Medicare toward a “premium support” model and has repeatedly voted against the Inflation Reduction Act’s drug pricing provisions.

Van Drew and Smith have also been consistent in supporting the free market system that has deprived most citizens of the standard of living that once defined the American dream.

In 2022, Kean, Van Drew and Smith opposed the IRA, which capped out-of-pocket drug costs for seniors at $2,000 annually and insulin at $35 per month.

Kean’s office did not respond to a request for comment. Van Drew and Smith also declined to discuss the matter.

Kean, Van Drew and Smith voted to cut $1 trillion from Medicaid, a similar goverment-run health insurance program that serves low-income Americans, and they ended American Care Act (ACA)–commonly known as Obamacare–subsidies that drove 4 million middle-class American families off their healthcare plans.

The expanded tax credits from the American Rescue Plan Act and the Inflation Reduction Act lapsed at the end of 2025 after Republicans in Congress refused to extend them.

The Reality for Seniors

Experts and healthcare advocates framed the move as another nail in the coffins of retirees living with a need for prescription medication.

The subsidies, which totaled $9.8 billion across 2025 and 2026, reduced the average monthly Part D premium by $16 this year, according to KFF.

Without them, the average standalone drug plan premium—currently about $36 per month—could increase by more than 40%, according to one analysis cited by Sen. Kirsten Gillibrand’s office.

Juliette Cubanski, vice president of the Program on Medicare Policy at KFF, warned that “some Part D stand-alone drug plan enrollees could face a larger premium increase for drug coverage next year than in recent years”.

“That might not sound like a lot of money to some people,” said Cubanski. “To put it in context, the average premium now for drug coverage through standalone plans is $36. So people might have had to pay nearly 50% more for drug coverage this year without this demonstration”.

The impact will fall hardest on seniors enrolled in traditional Medicare with standalone Part D plans—a group disproportionately comprised of those with complex health needs or who have chosen to keep their own doctors rather than join Medicare Advantage networks.

Shannon Benton, executive director of the Senior Citizens League, said even modest increases can devastate seniors on fixed incomes.

“Our concern is that rising costs could push people to change coverage for financial reasons rather than because it’s the right choice for their healthcare needs,” Benton said.

Vanderbilt health policy professor Stacie Dusetzina described the policy as a deliberate step toward privatizing Medicare.

“Project 2025 was pretty blunt about wanting to push more people into Medicare Advantage,” Dusetzina said. “One way to really accelerate that is to make it very expensive to stay in traditional Medicare.”

A Philosophical Victory

For conservative policy advocates, the subsidy’s termination represents a principled withdrawal of government from private markets—even if it means higher costs for seniors.

The Competitive Enterprise Institute argued that the Inflation Reduction Act “shifted more costs onto Part D plan sponsors,” creating an unsustainable dynamic where “the large increase in average costs was borne not by the beneficiaries, but by the taxpayers”.

The Federalist praised the administration’s action as “a smart steward of scarce taxpayer dollars” and said eliminating the subsidy “may increase Part D premiums slightly” but would “restore more of a competitive balance”.

For the roughly 25 million Americans who rely on standalone Part D plans, that balance will be measured in dollars subtracted from monthly budgets—a cost that conservative advocates acknowledge but frame as necessary for market discipline.

CMS has said final 2027 premium figures will be released after the election in November.