By Sally Pipes
Friday, 31 October 2025 04:45 PM EDT
Seniors shopping for a prescription drug plan during this year’s Medicare open enrollment season face an alarming reality: fewer choices and higher costs. The program’s taxpayer burden has surged, with the Democratic-led Inflation Reduction Act (IRA) of 2022 reshaping the landscape of Part D coverage in ways that critics argue harm beneficiaries and inflate expenses.
Part D, designed two decades ago to allow seniors to purchase subsidized prescription drug plans from private insurers, was built on market principles. Insurers competed for enrollees, creating affordable options for both beneficiaries and taxpayers. In 2024, the average plan cost seniors just $43 per month, with 90% of enrollees reporting satisfaction.
However, the IRA introduced sweeping changes, capping out-of-pocket spending at $2,000 annually and limiting insulin costs to $35 monthly. These measures, while seemingly beneficial, triggered a backlash from insurers, who raised premiums to offset new liabilities. The Biden administration concealed these hikes through a “demonstration” program, offering federal premium cuts to select seniors ahead of the 2024 election. This maneuver shielded voters from immediate costs but left taxpayers footing a $5 billion bill.
The policy’s fallout is stark. Insurers have exited the market, reducing plan options from an average of 30 in 2021 to 8–12 by 2026, depending on location. Broker fees have also been eliminated, leaving seniors without professional guidance when selecting plans. Meanwhile, subsidies are set to jump 31% in 2026, reaching $243.78 per enrollee, despite warnings that premiums could have risen 600% without federal intervention.
The Trump administration’s attempts to scale back the program have only exacerbated the crisis, triggering new subsidies to compensate for reduced premium cuts. Critics argue that Democrats’ interference has destabilized a system that required no reform, leaving seniors with higher costs, fewer options, and a deteriorating experience. While beneficiaries are temporarily shielded from financial strain, taxpayers bear the brunt of billions in unnecessary spending.
Sally C. Pipes is President, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is “The World’s Medicine Chest: How America Achieved Pharmaceutical Supremacy — and How to Keep It.” Follow her on X @sallypipes. Read more of Sally Pipes’ reports — here.
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