Trump Administration Ends Part D Premium Subsidies as Broader Medicare Cuts Loom

The Trump administration is moving to end a subsidy program that stabilizes Medicare Part D prescription drug premiums for nearly 25 million seniors, a shift that could raise out-of-pocket costs just as open enrollment begins. Meanwhile, the recently signed One Big Beautiful Bill Act triggers automatic Medicare spending cuts of up to $536 billion through 2034 and alters the program’s prescription drug negotiation framework.

The Centers for Medicare & Medicaid Services announced Tuesday that it will terminate the premium stabilization program, which was established under the Biden administration to offset premium increases and had been scheduled to run through at least 2027. The subsidies reduced average Part D premiums by about 40% in 2025, according to administration data. The elimination aligns with broader efforts to reduce social spending. Premiums are already under pressure from expensive specialty drugs like GLP-1s. Open enrollment for Part D coverage begins Oct. 15.

The One Big Beautiful Bill Act will trigger Statutory Pay-As-You-Go Act sequestration, reducing Medicare spending by roughly $45 billion in 2026 alone and about $536 billion through 2034. The law also weakens Medicare’s authority to negotiate drug prices, originally expanded under the Inflation Reduction Act. Certain orphan drugs—medications developed for rare diseases—may now remain exempt from price negotiations. The executive director of the Program on Medicare Policy at KFF said this change increases Medicare spending and likely raises costs for beneficiaries who take these high-cost specialty medications.

Other provisions in the law delay until 2034 planned expansions of the Extra Help program and Medicare Savings Programs, which assist lower-income seniors with premiums, deductibles, and cost-sharing. Federal minimum staffing requirements for nursing homes participating in Medicare and Medicaid are similarly blocked until 2034. The law may also reduce the number of dual-eligible individuals—those relying on both Medicare and Medicaid—by approximately 1.3 million through 2034, potentially affecting long-term care and other supplemental benefits.

In a separate change, the Trump administration ended Medicare eligibility for certain lawfully present immigrants, a first in the program’s history. The administration has also proposed reducing federal payments to Medicare Advantage plans, which could lead insurers to cut benefits.

Roughly nine in ten seniors take prescription drugs, and many face difficulty affording them. While the Inflation Reduction Act capped out-of-pocket drug spending for Medicare enrollees starting last year, the termination of premium subsidies moves in the opposite direction, undercutting stated commitments to prescription drug affordability. Core Medicare benefits themselves remain protected, officials maintain, though indirect effects could still affect beneficiaries over time.