Millions of older adults on Medicare prescription drug coverage may face higher monthly costs in 2027 due to the termination of a temporary subsidy program. The Centers for Medicare & Medicaid Services (CMS) announced it would end the program, initially set up by the Biden administration in 2024 to reduce Medicare Part D prescription drug costs. This decision was in response to the 2022 Inflation Reduction Act.
Although federal officials claim the financial impact on Medicare beneficiaries will be minimal, the upcoming change raises concerns amid a high-stakes midterm election year. Voters, including many older adults on fixed incomes, have identified cost of living as a primary concern. Approximately 25 million Americans with Medicare Part D plans will learn about their 2027 rates in the fall, coinciding with the November elections.
Democrats have criticized CMS’s move, viewing it as part of a broader pattern of federal actions impacting healthcare affordability. Senator Chuck Schumer expressed outrage on social media, describing the administration’s decision as “heartless and cruel” by increasing prescription costs for seniors.
“Heartless, cruel, and completely by choice,” Schumer remarked.
CMS Administrator Dr. Mehmet Oz defended ending the subsidy program, citing the prevention of billions in taxpayer dollars being directed to insurance companies. The estimated cost to the agency was $3.6 billion in 2026. He noted that most Medicare beneficiaries would see less than a $10 monthly increase, and some might even experience lower premiums. CMS stated continued access to low-cost plans and ongoing efforts to lower prescription drug prices, including the availability of $50-per-month GLP-1s for seniors.
The federal government also directly negotiates with pharmaceutical companies to reduce prices on some expensive Medicare drugs, a program created by Congress in 2022. The decision does not affect the out-of-pocket cap for standalone Medicare drug coverage, which will rise from $2,100 in 2026 to $2,400 in 2027.
Data from the healthcare research nonprofit KFF shows that Part D beneficiaries paid an average of $36 a month this year for drug premiums, supported by subsidies. The subsidies reduced the average premium by $16 in 2026, according to the federal Medicare Payment Advisory Commission (MedPAC). The full impact and additional costs remain uncertain, with CMS planning to release detailed premium information in September.
Juliette Cubanski, vice president and director of Medicare policy at KFF, mentioned that while price increases may be marginal for some, they could significantly affect others, especially when combined with rising costs in areas like groceries, gas, and housing. She emphasized the importance for consumers in understanding their financial situation after monthly expenses.
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