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Admin Ending Medicare Drug Subsidies 07/31 06:30
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.
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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