The Trump administration announced this week it is making a key change to Medicare, a federal health insurance program widely used in the United States.
Medicare is a government-funded program managed by the Centers for Medicare & Medicaid Services. CMS said Tuesday it will no longer provide federal subsidies meant to keep premiums stable for Medicare prescription drug plans, starting in 2027. CMS Administrator Dr. Mehmet Oz said that the elimination of “Medicare Part D,” the subsidy that started under the Biden administration, was warranted because government “bailout” is no longer needed.
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Oz suggested the subsidy program benefited “big insurance companies” over patients, to the tune of billions of dollars, calling the practice “unacceptable.” It cost CMS an estimated $3.6 billion in 2026 to subsidize prescription drugs through private insurance plans for people on Medicare.
“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,” Oz wrote in a post on X.
While Medicare is a federal health plan, it provides millions of beneficiaries the option of filling prescription drug coverage through private insurance plans under Medicare Part D. The optional coverage helps beneficiaries pay for brand-name and generic medications.
Major Medicare Part D insurers include UnitedHealth Group, Humana, and CVS Health’s Aetna. Nearly 25 million people were enrolled in stand-alone Medicare Part D drug plans in 2026, according to KFF.
“It’s certainly possible that without this enhanced financial support in place for 2027, some Medicare beneficiaries enrolled in [Part D plans] could face relatively steep premium increases for drug coverage next year,” Juliette Cubanski, director of KFF’s program on Medicare policy, told the Washington Post.
The national base beneficiary premium for Medicare Part D will be $41.33 in 2027, according to CMS. Federal law stipulates that annual increases in that premium remain capped at 6% through 2029.
Medicare Part D was implemented by the Biden administration in 2024 to lower patients’ prescription drug costs.
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Oz said Wednesday that the government subsidy program created a bailout for insurance companies.
“We ended it,” Oz wrote on X. “The Trump Administration is focused on delivering real results: Affordable plans: 90% + seniors will be able to access drug plans under $10/mo. Lower drug prices: approximately 250,000 Medicare-eligible beneficiaries have signed up to get affordable GLP-1s at just $50/mo., representing hundreds of dollars in monthly savings for seniors. Protecting the integrity of Medicare: fighting for America’s seniors, not big insurance companies.”
