The Trump administration is ending a Medicare drug subsidy program.
Here's how it could affect costs
[July 31, 2026]
By ALI SWENSON
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.
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 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.
AARP Executive Vice President Nancy LeaMond said her organization,
which serves Americans 50 and older, had supported the temporary
subsidy.
“While it’s too early to know the full impact of this change, it
would be unfortunate if this decision made Part D coverage less
affordable, just as we’re beginning to see billions in savings from
Medicare drug price negotiation,” she said in a statement.
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.”
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