10
Loading video...
By Suzanne Blake
Reporter
0
Share
Newsweek is a Trust Project member
See more of our trusted coverage when you search.Prefer Newsweek on Googleto see more of our trusted coverage when you search.
Millions of seniors could face higher prescription drug costs after the Trump administration announced plans to end a temporary Medicare subsidy program a year earlier than originally scheduled, according to a new warning from Democratic leaders urging the White House to reverse course.
On Wednesday, New York Governor Kathy Hochul and Senator Kirsten Gillibrand criticized the administration's decision to terminate the Medicare Part D Premium Stabilization Demonstration Program at the end of 2026.
Gillibrand warned the move could lead to a 40 percent increase in Medicare Part D premiums, while Hochul said the change would place additional financial pressure on seniors already struggling with rising costs.
Read More on Politics
“While Republicans in Washington are hellbent on making life harder and more expensive for hard working Americans, I'm staying laser-focused on helping seniors and putting money back into New Yorkers' pockets,” Hochul said.
Why It Matters
Medicare Part D covers prescription drugs for millions of Americans, primarily seniors and people with disabilities.
The Part D Premium Stabilization Demonstration Program was introduced in 2024 to help limit premium increases and cushion the impact of the changes made to the Medicare prescription drug benefit under the Inflation Reduction Act.
While Democrats say ending the subsidies will raise costs for seniors, the Centers for Medicare & Medicaid Services (CMS) says the program was always intended to be temporary and is no longer necessary because insurers now have enough experience to accurately price their plans.
...
What to Know
The Trump administration announced last month that the Part D Premium Stabilization Demonstration Program will end on December 31, 2026, one year earlier than originally planned.
Hochul's office says approximately 1.3 million seniors in New York could be affected by the change.
Meanwhile, Gillibrand said the program has successfully lowered costs and ending it could result in substantial premium increases for beneficiaries.
“This administration has money for bombs abroad, but not for our seniors here at home,” Gillibrand said Wednesday. “It’s a betrayal of our values and it is completely unacceptable.”
Across the country, 25 million Americans are enrolled in standalone Medicare Part D prescription drug plans, but it’s unclear exactly how many would see higher premiums.
“Many Medicare beneficiaries are likely going to see higher premiums. Exactly how much remains to be seen, as insurers are still finalizing their pricing,” Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek.
“The program was created by CMS to artificially keep Part D premiums lower through government subsidies. In other words, many seniors have been paying less than the true cost because the government was making up the difference.”
What CMS Says
The Trump administration has defended the move, saying that the Part D market has stabilized and no longer requires federal subsidies.
"We are stabilizing the market, so this bailout is no longer needed. Premiums will go up by less than $10 for most Medicare recipients, with many even seeing lower premiums," CMS Administrator Dr. Mehmet Oz said in a post on X.
A CMS spokesperson told Yahoo News that the demonstration program was always envisioned as a temporary measure.
“The Part D market is stabilizing following three years of disruption due to the Inflation Reduction Act redesign in plan years 2024, 2025, and 2026—this demonstration was always intended to be a temporary measure to address market instability,” the spokesperson said.
"We understand that outside organizations without plan bid information have voiced concerns, however our data shows that plan bids have stabilized."
What Happens Next
The subsidy program is currently scheduled to expire on December 31, 2026.
Unless the administration reverses its decision or Congress intervenes, Medicare beneficiaries will begin selecting 2027 prescription drug plans without the temporary federal support that has helped keep down premiums since 2024.
“Many beneficiaries could reduce or avoid those increases by comparing plans during Open Enrollment rather than automatically renewing their current coverage,” Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, told Newsweek.
“The good news is Medicare appears to be entering into a new time where drug-price negotiations and annual out-of-pocket caps are providing significant savings, but beneficiaries will need to pay closer attention to plan selection each year.”
Contact Newsweek editors on this story: Jason Lemon and Gray R. Thomas
View 0 Comments
Submit Correction
View Editorial & AI Guidelines