Trump administration ends key Medicare drug subsidies

What happened

The Centers for Medicare and Medicaid Services said Tuesday it will end a Medicare subsidy program aimed at lowering prescription costs for some seniors at the end of 2026, one year ahead of schedule. The Medicare prescription drug benefit, which is expected to cost the government some $3.6 billion in subsidies this year, was introduced by former President Joe Biden in 2024. It shields some 25 million people with “Part D” Medicare plans from steep insurance premium hikes.

Who said what

Characterizing the government subsidies as a “bailout” that “gave BILLIONS of taxpayer money DIRECTLY to Big Insurance Companies,” CMS Administrator Mehmet Oz said on social media that the administration is “stabilizing the market.” All but a quarter of Part D enrollees are likely to see their premiums rise next year as a result of the change, some by $20 a month, an anonymous Trump administration official told The Wall Street Journal.

The change could “inflame the debate” about healthcare costs at a time when “voters’ concerns about the cost of living are a top campaign issue,” Bloomberg said. Republicans could find this “politically damaging” ahead of the November midterm elections, The New York Times said.

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What next?

CMS will release the new monthly Part D premiums in September, which means Medicare users could be in for some “sticker shock while shopping for next year’s drug plan,” the Times said.