Why It Matters
The Trump administration terminated the Medicare Part D Premium Stabilization Demonstration in 2026, cutting short a program designed to run through plan year 2027, according to a new Congressional Research Service (CRS) report.
The Medicare Payment Advisory Commission (MedPAC) found the demonstration had lowered average stand-alone Part D premiums by $26 in 2025 and $13 in 2026, relative to the 6% statutory cap alone.
Over 50 Members of Congress have since signed a letter asking the Centers for Medicare & Medicaid Services (CMS) to reverse its termination decision.
The Big Picture
The demonstration grew out of the Inflation Reduction Act of 2022 (P.L. 117-169), which redesigned the Part D benefit to reduce enrollee out-of-pocket costs while shifting more upfront costs to plan sponsors. The law also capped annual growth in the base beneficiary premium at 6% through 2030.
After reviewing 2025 bids, CMS found a 179% increase in the National Average Monthly Bid Amount relative to 2024 and announced the voluntary demonstration in 2024 to stabilize the market.
The 2025 program included a $15 direct subsidy to the base beneficiary premium, additional subsidies capping year-over-year increases at $35 and narrowed risk corridors.
For 2026, CMS reduced the direct subsidy to $10, eliminated the narrowed risk corridors and for the first time rejected certain outlier plan bids with significant premium increases.
MedPAC's July data book shows that without any premium stabilization, average stand-alone premiums in 2025 would have reached $84; the demonstration brought that figure to $39. CMS estimated the demonstration cost $6.2 billion in 2025 and $3.6 billion in 2026.
On July 28, CMS announced the demonstration would conclude at the end of the 2026 plan year, stating its bid analysis indicated additional subsidies were no longer needed.
The number of stand-alone plans fell to 360 in 2026 from 709 in 2024, a decline the report says makes the market more vulnerable to large enrollment shifts.
The Bottom Line
H.R. 10374, the Affordable Premiums for Seniors Act of 2026, was introduced Sept. 14 and referred to the House Energy and Commerce and Ways and Means Committees; it would continue the demonstration until the Secretary of Health and Human Services determines termination would not increase premiums.
The statutory 6% cap on annual base beneficiary premium growth holds only until 2030, and the base beneficiary premium may rise by more than 6% in 2030 and later years.
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