Moneywise and Yahoo Finance LLC may earn commission or revenue through links in the content below. For about two years, the federal government has kept a lid on Medicare drug premiums for millions of Americans. That arrangement is over.
On July 28, 2026, the U.S. Centers for Medicare and Medicaid Services (CMS) (1) announced an end to the Part D Premium Stabilization Demonstration. This subsidy was introduced under the Inflation Reduction Act of 2022 signed by President Joe Biden, according to Forbes (2).
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For those worried about the price tag of their essential medicines, here's what you need to know. The Inflation Reduction Act capped what beneficiaries pay out-of-pocket for prescriptions at $2,000 a year starting in 2025. This reduced costs for patients, but it shifted the burden to insurance companies, some of whom would have had to raise premiums on Part D drug plans, according to the Kaiser Family Foundation (KFF) (3).
To avoid this problem, the Biden administration introduced the Part D Premium Stabilization Demonstration to subsidize the insurance companies to avoid any premium increases. "The demonstration worked as intended to stabilize premiums, with the average monthly PDP premium holding steady at under $40 in 2025," says the KFF report. Government Accountability Office (4) confirmed this by estimating that monthly premiums would have jumped "from approximately $43 in 2024 to $81 in 2025," without the program.
That report also estimated that the program cost the federal government $9.8 billion in 2025 and 2026. By ending the program, the Trump administration is effectively shifting the burden back to patients by letting insurance companies raise premiums. Mehmet Oz, the administrator for the CMS, wrote on X (5) that most Medicare recipients will see premiums climb by less than $10.
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