The Trump administration is ending temporary federal subsidies that have helped keep Medicare Part D drug plan premiums low, cutting them off at the close of 2026 rather than letting them run through 2027 as originally planned. The subsidies were introduced by the Biden administration under the 2022 Inflation Reduction Act to cushion insurers as a new $2,000 annual cap on out-of-pocket drug costs took effect, and their removal is likely to raise premiums for millions of Medicare beneficiaries just as that cap beds in.

The subsidies had been reducing average drug plan premiums by around $16 a year and were projected to cost roughly $9.8 billion across 2025 and 2026. Dr Mehmet Oz, head of the Centers for Medicare and Medicaid Services, defended scrapping them, calling the payments a wasteful handout of "billions of taxpayer money" to insurers, and suggested most enrollees would pay less than $10 more per month. Independent experts are more cautious, noting that with average premiums already around $36, the change could mean a much larger proportional rise for some of the roughly 23 million people on standalone Part D plans, and could push more beneficiaries towards Medicare Advantage plans, which have lower premiums but more restricted provider networks.