Millions of seniors face higher Medicare drug costs in 2027

Medicare is about to get a change that could hit millions of seniors right in the wallet. The Trump administration is ending a temporary program that helped keep Medicare Part D prescription drug premiums under control. The program expires after 2026, meaning some seniors could see their monthly premiums jump in 2027.

The training wheels are coming off

The Centers for Medicare & Medicaid Services (CMS) has been using the Part D Premium Stabilization Demonstration to cushion the impact of major changes to Medicare's prescription drug benefit. The program began in 2025 after the Inflation Reduction Act changed how Part D works, shifting more prescription-drug costs onto insurers.

To keep premiums from suddenly going feral, the government provided additional financial support to participating insurers and put limits on how much some premiums could rise. CMS gradually reduced that support in 2026. Now, the agency says insurers have had enough time to adjust to the redesigned Medicare drug benefit, so the stabilization program is going away entirely after this year.

The extra costs aren’t exactly pocket change

The average Medicare Part D premium is currently around $36 a month, according to KFF. The Trump administration says roughly a quarter of enrollees could see premiums stay flat or decrease in 2027, while about 30% could see an increase of less than $10 per month. For the remaining roughly 45%, the administration expects increases that will generally fall between $11 and $20 a month.

That does not mean every senior's bill will automatically rise by $20. Medicare Part D premiums vary by plan, location, and coverage, and beneficiaries can switch plans during open enrollment. But it does mean millions of people could have to start shopping around more carefully. And for someone living on a fixed income, an extra $10, $15, or $20 every month isn't exactly pocket change.

The numbers behind the numbers

CMS says the national average monthly bid submitted by insurers for 2027 Part D plans is $296.05, a 24% increase from the previous year. The resulting base beneficiary premium is $41.33, up 6% year over year.

Before anyone sees that $296 number and starts screaming at their calculator, there's an important distinction. The bid is not the amount every Medicare beneficiary pays each month but part of the formula CMS uses to calculate premiums and government subsidies. Still, the direction of travel is not exactly subtle.

Why drug plans are getting more expensive 

Part of the answer is the Inflation Reduction Act, which made some major changes to Medicare drug coverage. The law capped annual out-of-pocket prescription drug spending for Part D beneficiaries and gave the federal government new powers to negotiate prices for certain expensive medicines.

At the same time, it also shifted more financial responsibility toward Part D insurers. That has created a weird balancing act of seniors getting more protection from massive drug bills, while insurers have more costs to absorb.

Of course, this became political

The Trump administration argues that the premium stabilization program effectively sent billions of taxpayer dollars to insurance companies and says it isn't necessary anymore. CMS Administrator Mehmet Oz has described the payments as a bailout for insurers and argued that the market is now stable enough to operate without them.

The Biden administration, meanwhile, defended the Inflation Reduction Act's broader approach, particularly its provisions designed to reduce prescription costs and allow Medicare to negotiate prices for some high-cost drugs.

So we are basically watching two administrations argue over whether the government should spend money now to keep insurance premiums down or let insurers operate with less government support and see where premiums land.

The good news is you aren't necessarily stuck with your current price

The biggest thing Medicare beneficiaries should know is that your current Part D plan isn't the only option. If your premium changes in 2027, you can compare plans during Medicare's annual open enrollment period. Different plans can have dramatically different premiums, drug formularies, deductibles, and out-of-pocket costs.

This information will be crucial when open enrollment begins. According to the administration, most beneficiaries will still have access to low-cost plans, and officials expect many plans to remain available for $10 or less per month. The smart move? Start comparing plans early.

Sources: ABC News, Healthcare Dive