Medicare Part D: Beneficiary Premium Stabilization Demonstration

The U.S. Government Accountability Office (GAO) has reported on the Medicare Part D Premium Stabilization Demonstration, initiated by the Centers for Medicare & Medicaid Services (CMS) in 2025. This demonstration was designed to mitigate substantial increases in beneficiary premiums for standalone prescription drug plans, which were projected to nearly double in 2025 due to the Inflation Reduction Act of 2022. CMS subsidized premiums and limited increases, costing an estimated $9.8 billion for 2025 and 2026, with nearly all plan sponsors participating. The GAO's analysis indicates that average premiums for beneficiaries not eligible for low-income subsidies increased slightly from $42 to $43, and enrollment in standalone plans remained stable at 42% of all Part D enrollees.

While the demonstration appears to have achieved its immediate goals of stabilizing premiums and enrollment, a formal evaluation by the Office of the Assistant Secretary for Planning and Evaluation (ASPE) is ongoing to determine the extent to which these outcomes are attributable to the demonstration versus other factors. Regulated entities, particularly insurers offering Medicare Part D plans, should be aware of the financial implications and the ongoing evaluation of this significant government intervention in the prescription drug benefit market. The GAO received the finalized evaluation framework in January 2026, suggesting continued scrutiny of the program's effectiveness and long-term impact.