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CMS will discontinue the CMS Part D stabilization program at the end of this year, returning the standalone prescription drug plan market to what the agency called “traditional market conditions.”
Why CMS Is Ending the Part D Stabilization Program Now
CMS said July 28 its analysis of 2027 bids indicated insurers had gained sufficient experience under the redesigned Part D benefit to support their assumptions in developing prescription drug plan bids. This assessment suggests the agency views the multi-year adjustment period following the Inflation Reduction Act’s Part D redesign as having reached a point of stability that no longer requires additional federal subsidy support.
Key Figures for the 2027 Plan Year
The 2027 national average monthly bid amount, which is used to calculate government subsidies for plans, will be $296.05. The national base beneficiary premium will be $41.33. The 2027 de minimis amount is $2. Final average premiums for 2027 Medicare Advantage and Part D plans are expected to be released in September.
The Origins of the CMS Part D Stabilization Program
The Biden administration originally announced the stabilization program in July 2024 to test whether additional premium subsidies and financial protections would stabilize year-over-year premium changes for participating standalone plans while the Inflation Reduction Act’s Part D redesign took effect. It reduced beneficiary premiums by up to $15 in 2025 and capped each plan’s premium increase at $35 from 2024 to 2025, with added risk corridor protections for insurers.
How the Program Was Scaled Back for 2026
CMS scaled the program back for 2026, cutting the monthly subsidy to $10, raising the allowable premium increase to $50, and eliminating the enhanced risk corridors. The agency said at the time it had taken what it called unprecedented steps to reject standalone drug plan bids with steep year-over-year premium increases or reduced benefits.
What GAO Found About the CMS Part D Stabilization Program’s Cost and Impact
In a February report, the Government Accountability Office said CMS officials estimated the demonstration would cost $9.8 billion across 2025 and 2026, and that nearly all plan sponsors opted to participate. GAO found that without the program, monthly premiums for beneficiaries who stayed in their 2024 plan would have nearly doubled on average last year.
Actual Premium Outcomes Under the Program
Average standalone plan premiums for beneficiaries not eligible for the low-income subsidy instead rose from $42 in 2024 to $43 in 2025, a far more modest increase than the near-doubling GAO estimated would have occurred without the stabilization program’s subsidies and protections in place.
How the Standalone Drug Plan Market Has Shifted During the CMS Part D Stabilization Program
The number of standalone prescription drug plans fell to 360 nationwide in 2026 from 464 in 2025, according to KFF. About 58% of Part D enrollees received drug coverage through Medicare Advantage plans in 2025, compared with 42% in standalone plans.
What This Shift Suggests About the Broader Part D Market
Even with the stabilization program’s premium protections in place, the continued decline in standalone plan count and enrollees suggests broader market pressures, likely tied to insurer profitability challenges under the redesigned benefit, were already reshaping the Part D landscape independent of the subsidy program’s presence or absence.
What Ending This Program Means for Beneficiaries and Insurers
With the CMS Part D stabilization program set to end and the market returning to traditional conditions for 2027, beneficiaries in standalone prescription drug plans may face a different premium trajectory than the relatively modest increases seen in 2025. Insurers, having now operated under the redesigned Part D benefit for multiple plan years, will need to price their 2027 bids without the risk corridor protections and subsidy support that helped cushion the transition.
What to Watch Going Forward
As final average premiums for 2027 Medicare Advantage and Part D plans are released in September, industry observers and beneficiaries will get their first clear look at how the standalone drug plan market performs without the stabilization program’s protections. Given GAO’s finding that premiums would have nearly doubled in 2025 without the demonstration, and the continued decline in standalone plan participation even with those protections in place, the transition back to “traditional market conditions” could test whether insurers have genuinely stabilized their pricing models or whether beneficiaries will see steeper premium increases once the safety net is removed.
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