Billions in cuts: Trump administration to end drug subsidies

The administration of US President Donald Trump announced this evening (Tuesday) that it will end the subsidy program designed to curb the rise in premiums for prescription drug insurance plans under Medicare Part D. The decision is expected to affect about 25 million enrollees, with many of them potentially paying more for drug coverage starting in 2027.

The program, which provided insurance companies with subsidies totaling approximately $3.6 billion this year, was intended to prevent a sharp spike in premiums. According to administration officials, it will be canceled after 2026, arguing that it encouraged insurance companies to raise prices knowing that the government would cover part of the costs. The administration emphasizes that not all enrollees will be affected equally. According to them, about a quarter of enrollees are not expected to see a premium increase and may even benefit from a price reduction. Another 30% are expected to see an increase of less than $10 per month, while about 45% of enrollees are expected to pay between $11 and $20 more each month. According to administration officials, enrollees who choose to switch to another insurance plan will be able to find cheaper alternatives, and there are still options available on the market at accessible prices.

However, health experts warn that pressures on drug insurance prices are expected to continue. The rise in costs is attributed, among other things, to the increasing use of expensive drugs, including those in the GLP-1 family for the treatment of diabetes and obesity, as well as changes established under the Inflation Reduction Act of 2022, which reduced the out-of-pocket expenses of enrollees but increased the share of insurance companies in financing the costs.

According to data from the US Government Accountability Office, the subsidy program injected about $9.8 billion into the market over the last two years — $6.2 billion in 2025 and $3.6 billion in 2026. The Medicare Payment Advisory Commission estimated that the program reduced the average premium by about 40% in 2025 and by about 27% in 2026, so its cancellation could lead to a significant increase in costs for a large portion of enrollees.

As is known, Medicare is the federal health insurance program of the United States, intended primarily for people aged 65 and over, as well as for younger people with certain disabilities or serious illnesses. The program consists of several parts, with Part D providing coverage for prescription drugs through private insurance companies approved by the administration. Millions of Americans rely on this coverage to reduce drug costs, so any change in premiums or government subsidies could directly affect their monthly expenditure.