The federal government said it will stop propping up Medicare prescription-drug premiums after this year, a change that could raise 2027 drug-plan costs for the more than 1.7 million Texans who buy stand-alone Part D coverage. The Centers for Medicare & Medicaid Services (CMS) announced the decision July 28 in a technical fact sheet on 2027 drug-plan payments, tucking the news in alongside routine bid figures.
At issue is the Part D Premium Stabilization Demonstration — in plain terms, a temporary federal program that has been holding down what seniors pay each month for stand-alone drug plans. CMS created it for 2025 to smooth out premium swings after the Inflation Reduction Act of 2022 rewrote the Part D benefit, including a new $2,000 annual cap on what enrollees pay out of pocket for drugs.
The program did three things: it handed plans a flat $15 monthly subsidy that lowered the base premium, it capped how much any plan could raise its premium from one year to the next at $35, and it absorbed some of the financial risk plans took on under the redesigned benefit. CMS said it will end the program at the close of 2026 and let the market “return to operating under traditional market conditions” in 2027.
For the roughly 1.7 million Texas seniors in stand-alone Part D plans — part of nearly 4.9 million Texans on Medicare overall, according to healthinsurance.org’s Texas Medicare summary — the practical question is what happens to the monthly bill. Removing the $15 subsidy and the $35 increase cap takes away two direct brakes on premiums, though how much any individual pays will vary by plan and will not be clear until CMS posts final 2027 figures. The agency said it will release the finalized Medicare Advantage and Part D premiums and plan landscape in mid-to-late September, just before Medicare open enrollment begins October 15.
CMS defended the move as a sign the market has matured. Its analysis of 2027 bids, the agency said, showed that drug-plan sponsors now have “sufficient experience under the redesigned Part D benefit” to price their plans accurately without federal cushioning. The program was also expensive: the Government Accountability Office estimated it cost the government more than $9.8 billion across 2025 and 2026. Ending it stops that spending.
The technical numbers CMS released set the baseline for 2027. The national average monthly bid amount — the enrollment-weighted average of drug-plan bids that determines the federal subsidy — will be $296.05. The national base beneficiary premium, the starting point for each plan’s basic premium, will be $41.33. That base figure is still capped by the Inflation Reduction Act, which limits its year-over-year growth to 6% through 2029; that statutory cap survives the demonstration’s end. What goes away is the extra $15-and-$35 layer the demonstration added on top.
The effect reaches well beyond Texas. Health-policy analysts have estimated that nearly 25 million seniors nationwide were shielded by the program and could feel the change in 2027. Critics warn that pulling the cushion in the same window that Affordable Care Act marketplace enrollees face steep 2027 increases — Texas marketplace insurers raised 2026 premiums roughly 35%, and preliminary 2027 filings point to another double-digit year, according to KFF — stacks two rising drug-and-premium costs on households at once. The Dispatch has tracked that squeeze in its continuing coverage of Texas health-care affordability. Supporters counter that a temporary demonstration was never meant to be permanent, that its cost was real federal money, and that the IRA’s out-of-pocket cap and 6% base-premium limit still protect enrollees.
For Texas seniors, the bottom line will come into focus in September, when CMS posts the final 2027 premiums and the list of the roughly dozen stand-alone drug plans sold in the state. Until then, the July 28 announcement is a clear signal: the federal help that has quietly held Part D premiums down for two years is ending, and 2027 drug-plan prices will be set closer to what the market alone will bear.