How Each Administration Shaped Prescription Drug Costs
A president-by-president breakdown of Medicare Part D premiums, plan closures, and total costs from the program's 2007 rollout through the Inflation Reduction Act era.
However you want to look at it, when it comes to Medicare's Part D and presidents, the President and their Administration have a large role in what the costs of coverage will be.
According to Medicare.gov (the federal government), Part D is optional prescription drug coverage for those in Original Medicare and is available for those who:
According to the Medicare Board of Trustees, Medicare Part D is simply "access to drug insurance coverage on a voluntary basis" with the access being "heavily subsidized by Medicare."
Ultimately, private health insurers run the day-to-day operations, create and also sell Part D plans, while they are also paid to do so by the government.
Private health insurers are responsible for (on a small scale):
The government is responsible for (on a small scale):
Keep in mind that Part D premiums are also income-sensitive: higher earners pay an IRMAA surcharge on top of their Part D premium, determined by their income from two years prior. You can see the full picture of how IRMAA is calculated here.
One more important point before we get to the numbers: there are no regulations stating that the private health insurers must maintain any Part D plan from year to year. If a private health insurer decides that the current year's Part D plan is not working to their standards, they can — and most likely will — close that Part D plan once the year is over. Historically, about one-third of all Part D plans do not continue for more than 2 years.
Here is a breakdown of how continuous Medicare Part D plans have inflated in terms of premiums and total costs throughout each President's term in office.
Key Takeaway:
Private insurers run Part D day to day, but the federal government writes the rules and pays the subsidies. That makes each Presidential Administration directly responsible for what retirees pay for prescription drug coverage — and plans can and do close every year.
Under President Bush's two terms in office, Medicare Part D was established (2002) and then rolled out to the public (2007).
During his only 2 years of overseeing the program, premiums and total cost grew by the largest amount on record while over 20% of the original Part D plans closed.
| President George Bush (R) 2007 – 2009 | |||
|---|---|---|---|
| Original number of Part D plans | 2,788 | ||
| Part D plans remaining | 2,168 | ||
| Number of dropped Part D plans | 620 | ||
| Existing Plans Cost Breakdown | 2007 | 2009 | % Change (annual) |
| Premium | $35.03 | $47.70 | 16.69% |
| Premium + Deductible | $43.45 | $56.02 | 13.55% |
During President Obama's first term in office, 62% of the Part D plans available in his first year closed, while the remaining Part D plans increased in cost annually.
Thankfully, 7 new Part D plans were opened, and they were significantly lower in terms of the monthly premium than the existing Part D plans.
| President Barack Obama (D) 2010 – 2013 | |||
|---|---|---|---|
| Original number of Part D plans | 2,366 | ||
| Part D plans remaining | 899 | ||
| Number of dropped Part D plans | 1,467 | ||
| Existing Plans Cost Breakdown | 2010 | 2013 | % Change (annual) |
| Premium | $50.11 | $58.59 | 5.35% |
| Premium + Deductible | $63.15 | $72.27 | 4.60% |
In President Obama's second term in office, 53.42% of all plans that were available in 2014 closed by the end of his presidency in 2017.
The existing Part D plans grew by an average of about 4% annually, while the new plans introduced in 2017 were roughly 18% more expensive than the existing ones.
| President Barack Obama (D) 2014 – 2017 | |||
|---|---|---|---|
| Original number of Part D plans | 1,651 | ||
| Part D plans remaining | 769 | ||
| Number of dropped Part D plans | 882 | ||
| Existing Plans Cost Breakdown | 2014 | 2017 | % Change (annual) |
| Premium | $46.94 | $52.86 | 4.04% |
| Premium + Deductible | $62.01 | $71.81 | 5.02% |
Under President Donald Trump, the Part D plans underwent the smallest annual increases in both premiums and total costs on record.
10 new Part D plans were created, with premiums and total costs both being cheaper than the existing plans.
| President Donald Trump (R) 2018 – 2021 | |||
|---|---|---|---|
| Original number of Part D plans | 1,172 | ||
| Part D plans remaining | 947 | ||
| Number of dropped Part D plans | 225 | ||
| Existing Plans Cost Breakdown | 2018 | 2021 | % Change (annual) |
| Premium | $48.05 | $50.03 | 1.36% |
| Premium + Deductible | $70.00 | $74.56 | 2.13% |
During President Biden's term in office, Congress passed the Inflation Reduction Act (IRA).
The IRA places caps on how much Part D plan providers (private health insurers) can increase Part D plan premiums on an annual basis through 2029.
To quote the IRA:
"The base beneficiary premium for a prescription drug plan for a month in 2024 through 2029 shall be the lesser of:
Unfortunately for Medicare Part D beneficiaries, from 2022 to 2024 the Part D premiums increased by over 13% annually.
With no new Part D plans being created under President Biden's presidency, retirees who found their Part D plans increasing by double digits had no other options but to pay more.
| President Joseph Biden (D) 2022 – 2024 | |||
|---|---|---|---|
| Original number of Part D plans | 1,143 | ||
| Part D plans remaining | 953 | ||
| Number of dropped Part D plans | 190 | ||
| Existing Plans Cost Breakdown | 2022 | 2024 | % Change (annual) |
| Premium | $49.84 | $63.90 | 13.24% |
| Premium + Deductible | $79.05 | $94.83 | 9.53% |
Remember that higher-income beneficiaries pay even more than these base premiums through the Part D IRMAA surcharge. If your clients are near the IRMAA bracket thresholds, rising base premiums compound the problem — see the 2025 IRMAA brackets for the current surcharge amounts.
Due to the federal regulations that the private health insurers must follow, as well as the money (subsidies) they receive from the government, each Presidential Administration is — and will be — directly responsible for what retirees in Medicare have to pay for Part D coverage.
Based on this plan-level data, since the inception of Medicare Part D's coverage in 2007, existing plans saw their smallest annual premium and total-cost increases during President Trump's term (2018 – 2021), while the steepest growth came in the program's first two years under President Bush and again from 2022 to 2024 under President Biden.
As can be seen from the information above, each year private health insurers drop plans and then create new ones the following year.
To avoid the constraints of the Inflation Reduction Act, all the private health insurers need to do is close already existing Part D plans and then create new ones for the upcoming year. New Part D plans do not have to adhere to the 6.00% cap on premiums that the IRA imposes.
If the Inflation Reduction Act is not changed, the end result just may be that:
With now over 11,600 people retiring each day and having to enroll into Medicare to receive their Social Security benefit, any significant Part D increases may alter their retirement — even in an adverse way. For higher-income retirees the effect is doubled, because Medicare's IRMAA surcharges ride on top of these rising base premiums. If a client's income has dropped due to retirement or another life-changing event, they may be able to reduce that surcharge with an IRMAA appeal filed on Form SSA-44.
Your health is your most important asset — the time to plan for it is today. RetirementAdvisorPro gives financial advisors the tools to model Medicare costs, IRMAA surcharges, and healthcare inflation inside a client's full retirement income plan.
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