Mehmet Oz has finally found a private insurance subsidy he dislikes. His solution keeps the insurers and exposes people on Medicare to more of the cost.
The Centers for Medicare and Medicaid Services will end its Part D Premium Stabilization Demonstration after 2026. The program cost an estimated $3.6 billion this year and held down premiums for standalone prescription drug plans. Oz calls that a bailout. He has a point. Sending public money through private insurers so they can sell people an affordable public benefit is a rotten design.
Oz is withdrawing the premium support while preserving the private insurance structure that made it necessary. He found the corporate welfare, removed the welfare, and left the corporations in charge.
The bailout criticism is real
The subsidy followed a real policy shock. The Inflation Reduction Act improved Part D by capping annual patient spending at $2,000 in 2025. It also raised insurers’ share of catastrophic drug costs from 20 percent to 60 percent. Plans suddenly had to price a benefit with much more risk and little experience. Their average bids jumped 179 percent between 2024 and 2025.
CMS responded with a temporary demonstration. It lowered premiums, limited annual increases, and let Medicare absorb more of an insurer’s unexpected losses. The Government Accountability Office estimates the program cost $6.2 billion in 2025 and $3.6 billion in 2026. In the first year, 97 percent of the estimated cost went to premium stabilization and about 3 percent expanded protection against insurer losses.
That deserves criticism. A public program should not have to bribe private insurers to keep its premiums affordable. The special risk protection also gave insurers more shelter from losses without a matching change for unexpected gains. A progressive defense of Medicare does not require pretending every dollar paid to an insurance company is sacred.
The program was transitional. CMS had already reduced the premium discount and restored ordinary risk rules for 2026. Oz now argues that insurers have enough experience to price the redesigned benefit without more help. That is a coherent case for ending this payment. Leaving patients with the same middlemen and less protection is the failure.
The premium shock was not theoretical
The best evidence comes from the government’s own audit. GAO examined what would have happened in 2025 without the demonstration. For affected enrollees who stayed in the same standalone plan, the average monthly premium was projected to rise from about $43 to $81. About 3.9 million people faced increases between $40 and $100 a month. Nearly 1 million faced increases of at least $100.
With the program in place, the average premium rose only from $42 to $43, and standalone enrollment increased by about 2 percent. In 2026, KFF found that the average standalone premium fell to $36 a month. KFF estimates this year’s subsidy reduced premiums by an average of $16 per member each month.
That does not mean every enrollee will pay $16 more next year. Final 2027 plan rates will not be public until September. Oz says most increases will be less than $10 a month, and some premiums could fall. That prediction belongs to the administration that made the decision, and nobody can verify it against final plans yet.
Even a small increase lands on people already paying for food, housing, utilities, and medicine. A larger increase can force someone to switch plans. GAO warns that switching can disrupt access when the cheaper plan charges more for a needed drug or leaves it off the formulary entirely. Plan shopping cannot solve this when a lower premium comes with different drug coverage.
This market is already rigged toward bigger insurers
CMS says it is returning Part D to “traditional market conditions.” Those conditions are hardly a competitive paradise. The five largest companies controlled 91 percent of standalone Part D enrollment in 2025. KFF reports that Centene alone now has 35 percent of the standalone market.
Medicare Advantage plans also enter this market with a federal advantage. They can use government rebates to reduce their drug premiums, a tool unavailable to standalone plans serving people in traditional Medicare. KFF estimates those Medicare Advantage premium reductions cost the federal government $13 billion in 2026, compared with $3.6 billion for the demonstration Oz is ending. MedPAC separately found that the rebates reduced the average basic Medicare Advantage drug premium by $25 a month, more than twice the demonstration’s $12 effect on the average basic standalone premium.
The administration’s selective attack on corporate subsidies spares the larger one. It eliminates a smaller cushion for people who buy standalone coverage while leaving much more public money flowing through Medicare Advantage. That creates more pressure to leave traditional Medicare for plans run by the same giant insurers Oz claims to be disciplining.
Keep the benefit and remove the toll collector
Oz’s bailout line accidentally makes the case against the system he administers. If public money is paying insurers to make a public drug benefit affordable, the insurer is the expendable part.
A public drug benefit can pool risk across Medicare and negotiate prices. It can offer one standard of coverage without making patients decode dozens of bids and formularies. The government already finances Part D and subsidizes the plans. When premiums spike or insurers lose money, the government steps back in. Private insurers collect money for standing between the patient and the program.
Ending one subsidy does not fix that structure. It transfers more of its cost to people who need medicine. Oz can call the payment a bailout if he wants. A real break with corporate welfare would remove the corporation from the transaction.