Trump Administration Ends Medicare Part D Premium Stabilization Demonstration

On July 28, the Centers for Medicare & Medicaid Services (CMS) announced the conclusion of the Part D Premium Stabilization Demonstration, a program that had provided subsidies to mitigate prescription-drug costs for Medicare beneficiaries. The announcement was part of CMS’s annual release of the Medicare national average bid amount. The following day, CMS administrator Mehmet Oz posted on X that the Biden administration’s “bailout” of insurance companies had been ended and that most beneficiaries would see only modest premium changes.

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The demonstration grew out of the 2022 Inflation Reduction Act, which created a subsidy mechanism for Medicare Part D and introduced a premium-stabilization provision intended to limit average premium increases to about $2 per month. In October 2023, the Department of Health and Human Services identified an initial set of ten drugs for negotiation under the subsidy, with plans to expand coverage in subsequent years. By July 2024, CMS explained that the subsidy would shift from back-end reinsurance payments to an upfront, risk-adjusted payment, increasing plan liability for cost management.

Snopes

A Trump administration official told The Wall Street Journal that roughly 25 % of Part D enrollees would see their monthly premiums stay the same or decline, about 30 % would face an increase of less than $10, and the remaining 45 % could experience rises of $11 to $20 per month. Health-policy nonprofit KFF’s Juliette Cubanski warned that without the extra subsidies slated for 2027, stand-alone Part D plan participants could encounter larger premium hikes than in recent years.

Snopes

Oz emphasized that the policy change would reduce “bailout” spending and keep premiums low for most beneficiaries, citing ongoing efforts to lower drug prices through additional manufacturer-negotiated deals and a $50-per-month price cap for GLP-1 medications. CMS indicated that all Medicare beneficiaries will continue to have access to low-cost plans, and the agency plans to pursue further price-reduction strategies. Analysts note that higher premiums may encourage a shift toward Medicare Advantage plans, which often bundle drug coverage with no separate premium.

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