Medicare Part D Premiums Set to Jump 50% as Drug Subsidy Ends

Two Messages Hitting Seniors at Once

People on Medicare are getting two conflicting messages about drug costs this fall. At rallies, President Trump says the United States has gone from paying the world's highest drug prices to paying the lowest. At home, millions of people with stand-alone drug plans are opening notices that their premiums are going up.

A new KFF analysis finds that average monthly premiums for stand-alone Medicare prescription drug plans will rise by 50% in 2027.4 By that analysis, the typical enrollee would go from about $34 a month to $51 unless they switch to a cheaper plan before open enrollment ends on Dec. 7.8 Some individual increases are much larger. One Virginia enrollee was told his AARP-UnitedHealthcare drug plan would go from $39.60 a month to $121.90. After shopping around, he found a comparable Humana plan for $19.30.4

The notices arrive just before the Nov. 3 midterms. On Oct. 28 in Ohio, Trump told a rally that pharmaceuticals were going "great" and that Americans now pay the lowest drug prices anywhere.40 Both statements are being made at once, and they don't fit together.

How the Subsidy Ended

The direct cause is a decision the Centers for Medicare & Medicaid Services announced in July. CMS ended the Part D Premium Stabilization Demonstration after two years, even though it had been planned to run for three.17 The Biden administration set up the program because the Inflation Reduction Act capped seniors' out-of-pocket drug spending and moved more of the cost of expensive drugs onto insurers. Insurers didn't yet know how to price that extra risk.1 The program cost about $9.8 billion across 2025 and 2026.3

By some measures it did its job. Between 2024 and 2026, the average stand-alone premium dropped from $43 to $36 a month, and enrollment grew from 23 million to 25 million.3 KFF says the subsidy cut this year's average premium by $16. Its Medicare policy director said that without it, enrollees could have paid nearly 50% more.1 That is close to the increase KFF now projects for 2027.

CMS Administrator Mehmet Oz calls the program an insurance-industry bailout. He has said most enrollees would see premiums rise by less than $10 a month, and some would pay less.2 The administration also said that had the program continued, UnitedHealth Group alone would have received $1.5 billion.3 In its memo ending the program, CMS said insurers' 2027 bids showed they now had enough experience with the redesigned benefit to set prices without help.7

Why CMS and KFF Disagree

The biggest split in the coverage is over the numbers themselves. In September, CMS projected that the average stand-alone premium would rise by less than $1, from $35.09 to $36.23 KFF projects a 50% jump. KFF notes that CMS didn't explain how it reached its figure and may have assumed people would switch to cheaper plans.4

The two numbers answer different questions. CMS's figure appears to describe what happens if people shop around. KFF's describes what happens if people stay in the plan they have. That matters because many people don't switch. KFF found that about 10.4 million enrollees, or 76% of stand-alone enrollees who don't get low-income help, will pay more next year if they keep their current plan.4 That group includes 4.1 million people now paying no premium. They will pay something in 2027 because no zero-premium stand-alone plans will be offered.4 That point matters because thousands of people already lost coverage this year after small premiums appeared on what they thought were free plans and they missed payments as low as $8.4

The administration's own numbers also undercut its "less than $10" message. Over the summer, an official told the Wall Street Journal that 30% of Part D enrollees would see increases under $10 and 45% would see increases between $11 and $20.7 If 45% face increases above $10, the claim that "most" will pay less than $10 more is hard to support. In our reading, KFF's analysis is the better guide to what people will actually face. CMS's projection mainly shows what's possible for those who switch plans.

Premiums aren't the only cost going up. KFF projects the average stand-alone deductible will rise from $540 to $643. Most enrollees will also pay coinsurance, a percentage of a drug's price, rather than flat copays, which makes their costs harder to predict.4 The annual out-of-pocket cap, which the subsidy decision doesn't affect, is set to rise from $2,100 to $2,400.6

Medicare Advantage Comes Out Ahead

Medicare Advantage looks very different. CMS projects the average Medicare Advantage premium will fall 16.5%, from $14.37 to $12. It says the drug portion of those premiums will drop 38%.23 KFF finds that Medicare Advantage enrollees will pay an average of $9 a month for drug coverage in 2027, an increase of less than $2.4 About 31 million people get drug coverage through Medicare Advantage, compared with nearly 25 million in stand-alone plans.4

Ending the subsidy widens that gap. Experts said before the decision that it would fall hardest on people in traditional Medicare, because Advantage plans have more room to keep premiums low. They also warned it could push beneficiaries toward Advantage plans, which come with narrower networks of doctors and hospitals.1 Whatever the intent, the policy gives seniors a clear money reason to leave traditional Medicare.

The low Advantage premiums also hide other changes. The median in-network out-of-pocket limit in Advantage plans rose from $6,500 to $7,100.22 About 3.2 million people in individual Advantage plans have to pick new coverage because their plans are being discontinued.24 Several major insurers are leaving counties or dropping PPO plans.24 Averages can also mislead in individual markets. In King County, Washington, one AARP UnitedHealthcare Advantage plan is raising its premium from $38 to $55 a month.28

Do Lower Drug Prices Show Up in Medicare?

The White House points to its "most favored nation" agreements, which it says now cover 26 drugmakers and about 90% of the branded U.S. market. It projects more than $600 billion in savings. It also says TrumpRx has saved patients more than $700 million and that all state Medicaid programs now receive most-favored-nation prices.31

Outside analysts see a smaller payoff. KFF compared TrumpRx prices for 32 brand-name drugs with prices in other wealthy countries. Only five were the lowest in the world, and 13 were the highest.32 Pharmacy-trade coverage notes that the deals mostly affect Medicaid and cash purchases, and leave Medicare and private-insurance prices largely unchanged.35 The $600 billion figure is the administration's own projection and hasn't been checked independently. What Part D enrollees pay still depends on plan formularies and rebates that fall outside these deals.33 House Democrat Frank Pallone has asked the Government Accountability Office to investigate the administration's savings claims, saying it hasn't disclosed key details of the agreements.36

There is also a structural concern. One Harvard-affiliated researcher said some drugmakers have suggested that giving Medicaid most-favored-nation prices could spare them from cutting prices in Medicare, which is a much larger program.34 If that's right, the deals may be keeping Medicare drug prices high rather than lowering them.

The one clear Medicare benefit is narrow. The administration says more than 500,000 seniors are getting GLP-1 drugs for $50 a month and have saved $216 million so far.31

Medicaid Faces Bigger Changes

The administration is promoting Medicaid drug discounts while Medicaid's eligibility rules are getting much stricter. Under last year's reconciliation law, adults in the expansion population must show 80 hours a month of work, school, or volunteering. States have to put that in place by Jan. 1, 2027.16 Up to 20 million adults could be affected. A CMS rule issued in June defined medical frailty more narrowly than states expected, and at least six states will not let people simply attest that they qualify for an exemption.17 Nebraska and Montana are already enforcing the rules, and Iowa starts Dec. 1.1415

Experts told Time that the Medicaid drug deals mainly help state and federal budgets, not patients, since most Medicaid enrollees already pay little for drugs.34 In practice, the savings help states absorb cuts in the same law that is likely to remove some people from coverage.

What This Means

Taken together, the coverage shows how the administration is reshaping health costs. Its pricing wins are concentrated in programs where patients already pay little or where buyers pay cash. Costs that come out of seniors' monthly budgets, like premiums, deductibles, and coinsurance, are being pushed back onto households, especially those in traditional Medicare. The administration can reasonably argue that the stabilization program was always meant to be temporary.7 Ending it a year early, right before a midterm, without explaining CMS's projections, and while claiming victory on drug prices, leaves the burden on beneficiaries to find a better deal. For the millions who won't compare plans by Dec. 7, the higher premium will simply take effect.