New highs and more lows: Will we be seeing a wider range of 2026 Medicare Part D PDP premiums?

• Receive a uniform reduction of $15 to the base beneficiary premium (used to calculate the plan-specific basic premium) for all participating stand-alone PDPs. If the reduction would result in a plan’s total Part D premium (that is, the sum of the Part D basic and Part D supplemental premiums) being below $0, the plan’s basic Part D premium will be reduced to the point where the plan’s total Part D premium equals $0.
  
  
• Agree to a year-over-year increase limit of $35 to be imposed on a plan’s total Part D premium, meaning any plan-specific total Part D premium would not be permitted to increase more than $35 from CY 2024.
  
  
• Receive greater government risk sharing for potential plan losses.
  
  

"To prevent these politically unpopular premium increases in the lead up to the election, CMS’ 'voluntary' three-year stabilization plan would attempt to stave off significant Part D premium increases by funneling $7.2 billion to insurers. In other words, CMS’ plan is not so much a demonstration as it is a bailout. While the demonstration is marketed as “voluntary,” all insurers effectively must participate to maintain competitive prices."

(see also: The Wall Street Journal Editorial Board (September 30, 2024),  "A Medicare Election Bribe for Seniors."

"After accounting for information about 2025 bids from plans that provide coverage under Part D, CBO expects that the additional plan costs reflected in those bids will result in an increase in federal spending of $10 billion to $20 billion in calendar year 2025, compared with our earlier projections."

"CBO also estimates that the temporary subsidies will increase federal spending in calendar year 2025 by an additional $5 billion and that, over the next decade, this will lead to an increase of $2 billion in net spending for interest, relative to prior projections."

"The nonpartisan Congressional Budget Office (CBO) issued its fiscal analysis of the Biden-Harris administration’s Medicare Part D Premium Stabilization Demonstration Program. Among other findings, CBO estimates the program – which the Centers for Medicare & Medicaid Services (CMS) launched to artificially lower seniors’ premiums that have surged due to Democrat policymaking – could cost taxpayers more than $21 billion over three years if implemented as planned."

• 2025 National Average Monthly Bid amount - 280% increase
  
  The 2025 national average monthly Medicare Part D bid amount (NAMBA) increased 280% to $179.45 from the 2024 national average monthly bid of $64.28.  As noted by CMS, "[t]he national average monthly bid amount is [an enrollee] weighted average of the standardized bid amounts for each stand-alone prescription drug plan (PDP) and MA plan with prescription drug coverage (MA-PD)".
  
  With regard to the 280% increase in the 2025 NAMBA, CMS noted:

“[T]he [national average monthly 2025 Medicare Part D bid amount (NAMBA)] in 2025 looks different than in recent years because of the Part D benefit design changes. Importantly, the amount of increase in the NAMBA does not mean that Part D premiums will increase by a similar amount. A significant portion of the NAMBA increase represents funds moving from reinsurance payments to upfront payments in the form of the government subsidy to plans. The preliminary estimated average government subsidy to plans will be $142.67 in 2025.” [emphasis added]

CMS went on to further explain:

"This [280% NAMBA] increase is in line with expectations due to the redesign of the program that encourages better cost management of the Part D benefit by Part D sponsors through a larger risk-adjusted government Part D subsidy payment upfront rather than cost reconciliation on the back end based on beneficiary costs (i.e., reinsurance payments). Importantly, the amount of increase in the NAMBA does not mean that Part D premiums will increase by a similar amount. A significant portion of the NAMBA increase represents funds moving from reinsurance payments to upfront payments in the form of the government subsidy to plans."

As a comparison to last year, in July 2023, CMS calculated the 2024 average monthly Medicare Part D bid amount as $64.28 - an 85% increase over the 2023 average monthly bid of $34.71.

• The 2025 Base Medicare Part D premium - held at 6% increase
  
  The Part D Base Beneficiary Premium (BBP) is calculated every year by CMS using, in part, the Part D national average monthly premium bid which is weighted by Medicare plan enrollment.  The 2025 Medicare Part D Base premium (used to calculate late-enrollment penalties and the basic Part D premiums) was held to a 6% increase from 2024 by the Inflation Reduction Act (IRA) resulting in a base premium of $36.78.
  
  Without the IRA’s 6% limitation on increases, the 2025 Base Part D premium would have been $55.98.
  
  As a comparison, the 2024 Base Premium was also limited to a 6% increase resulting in a base premium of: $34.70 and without the IRA 6% increase limitation the Base premium would have been: $39.35.
  
  The following chart shows how the National Average Monthly Part D bid amount (NAMBA) has changed in comparison with the Medicare Part D Base Beneficiary Premium (BBP) from 2006 to 2025 and how the BBP would have increase in 2024 and 2025 if the value was not capped by the IRA at a 6% increase.