Drug prices & Part D
KFF: The Part D Subsidy Program Being Dropped Cost 9.8 Billion Dollars and Held Premiums Down for 24.9 Million Enrollees
A KFF analysis published after CMS's July 28 announcement tallies what the two-year Part D stabilization demonstration achieved, and describes the shrinking standalone drug plan market those enrollees will now navigate without that buffer.
By the Goodsurance editorial teamJuly 29, 2026
When CMS announced on July 28, 2026 that it was ending the Part D Premium Stabilization Demonstration after 2026, it cited plan sponsors' growing familiarity with the redesigned benefit as justification. A KFF Quick Takes analysis published in response puts concrete numbers on what the program achieved, and on the market the 24.9 million people enrolled in standalone prescription drug plans (PDPs) will now face.
The demonstration, which ran in plan years 2025 and 2026, cost a total of 9.8 billion dollars in federal outlay across both years. According to Medicare Payment Advisory Commission (MedPAC) data cited by KFF, the subsidy reduced the average standalone PDP premium by 26 dollars per month in 2025 and 16 dollars per month in 2026. PDP enrollment rose from 22.8 million at the start of 2024 to 24.9 million in 2026, a growth KFF attributes partly to the subsidy keeping standalone plan premiums more competitive with Medicare Advantage drug coverage.
The Part D stabilization subsidy cost 9.8 billion dollars over two years and saved enrollees up to 26 dollars a month. It ends after 2026, leaving a market with fewer plan choices.
For 2027, one statutory protection remains: the Inflation Reduction Act's premium stabilization provision caps the annual increase in the base beneficiary premium at 6 percent per year through 2029. The 2027 base beneficiary premium is set at 41.33 dollars, exactly 6 percent above the 2026 level of 38.99 dollars. Plan-specific premiums for standalone PDPs are built on top of that base figure and can run substantially higher. Without the demonstration's additional buffer, plan-level premiums could rise more sharply when 2027 plans are announced this fall.
The backdrop for this shift is a standalone PDP market that has already contracted considerably. In 2026, only 360 PDPs were offered nationwide, down 22 percent from 464 in 2025 and a sharp decline from roughly 30 plan options per average beneficiary in 2021 to just 11 today. KFF notes that the demonstration's removal coincides with both reduced plan availability and pricing pressure in the standalone drug plan segment.
Enrollees in standalone PDPs who want to compare 2027 options can do so beginning October 15, when the annual enrollment period opens.
In plain words
For two years, the government ran a program to keep Medicare drug plan premiums lower. It cost 9.8 billion dollars total and saved the average enrollee about 26 dollars a month in 2025 and 16 dollars a month in 2026. About 25 million people were in these standalone drug plans. That program is now ending. There is still a law that limits how much the base premium can go up each year, but individual plan premiums can still rise above that floor. There are also fewer drug plans to choose from than before. During the fall enrollment period starting October 15, enrollees should compare their options carefully.
Understand the basics first
Source: KFF
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