The U.S. administration under President Donald Trump announced the discontinuation of a Medicare subsidy program designed to lower prescription drug costs.
Rumors circulated online in late July 2026 regarding the Centers for Medicare and Medicaid Services’ (CMS) intention to end government subsidies for Medicare Part D, a program that assists beneficiaries with prescription expenses. Social media users shared claims that this policy change would increase costs for over 11 million Americans, with some characterizing it as the administration prioritizing cost savings over support for those most in need.
These reports were accurate. CMS confirmed the change on July 28, within its annual release of Medicare’s national average bid amount. The agency announced the conclusion of the Part D Premium Stabilization Demonstration, a program that aimed to reduce prescription drug costs. Major news outlets, including The Wall Street Journal, ABC News, Newsweek, and USA Today, subsequently reported on and verified CMS’s announcement.
In response to inquiries, CMS and the White House referred to social media posts by Mehmet Oz, the agency’s administrator, detailing the changes. On July 28, Oz posted on X, stating that the Biden administration had provided substantial taxpayer funds directly to insurance companies and that this bailout was no longer necessary due to market stabilization efforts. He indicated that most Medicare recipients would see a premium increase of less than $10, with many experiencing lower premiums, and affirmed continued access to low-cost plans and ongoing efforts to reduce prescription drug prices.
Oz further elaborated on July 29, asserting that the Biden administration had created an insurance company bailout that was now ended. In a video accompanying the post, he explained that the President’s initiatives to lower pharmaceutical prices had stabilized the Medicare drug plan market, enabling over 90% of beneficiaries to access plans costing under $10 per month. He stated that Medicare’s integrity was protected and the insurance company bailout concluded, framing it as problem-solving rather than subsidization.
The references to the Biden administration likely pertain to the 2022 Inflation Reduction Act, which included provisions to lower prescription drug costs by enhancing Medicare’s negotiating power with pharmaceutical companies. In October 2023, the Department of Health and Human Services (HHS) announced that the initial companies selected for the subsidy program had agreed to negotiations, with potential impacts on numerous additional drugs in subsequent years.
In July 2024, CMS clarified that government subsidies for Part D plans were shifting from a back-end reconciliation based on beneficiary costs to a larger upfront risk-adjusted payment. This change places more liability on plans to manage costs within that initial payment. The Inflation Reduction Act also includes a premium stabilization mechanism intended to limit average Part D premium increases for enrollees to approximately $2 per month. CMS stated that due to these changes, a greater portion of plan bid amounts would be covered by government subsidies, meaning changes to these bids would not necessarily reflect premium increases for beneficiaries.
The Wall Street Journal reported that a Trump administration official indicated that approximately 25% of Part D enrollees would see no change or a decrease in their monthly premiums following the change, while about 30% would experience an increase of less than $10. The remaining 45% were projected to see an increase between $11 and $20 per month. The article also suggested that higher Part D plan premiums might encourage more Medicare beneficiaries to enroll in Medicare Advantage plans, which often include drug benefits and have minimal or no premiums.
Juliette Cubanski, a vice president at the KFF health policy research organization, noted that the absence of these additional subsidies for 2027 could lead to larger premium increases for some stand-alone Part D plan enrollees. She also pointed out that while the subsidies helped mitigate some cost increases, they did not address the underlying cost pressures related to rising drug prices and the increasing use of expensive specialty drugs.
Reference