Medicare beneficiaries are silently approaching a growing crisis

To most Medicare beneficiaries, the system seems steady. Premiums feel manageable. Annual notices offer familiar choices. And when policymakers say Part D is in “satisfactory financial condition,” it sounds like reassurance. But underneath this surface calm, a crisis is taking shape—quietly, structurally, and at great cost to those who don’t pay attention.

The 2026 Part D prescription drug landscape is set to change dramatically, and not in ways that most enrollees are ready for. Behind the scenes, insurers are raising bid amounts by more than 30%, plan options are shrinking, coinsurance is replacing predictable copays, and the safety net for low-income seniors is thinning. If beneficiaries don’t act during open enrollment this fall, many could find themselves paying hundreds—or even thousands—more for the same prescriptions next year.

This is no longer just about rising costs. It’s about volatility, access, and a fraying system hiding behind stabilized numbers.

For most of the past decade, Medicare Part D premiums have looked stable. Even as drug prices rose, beneficiaries rarely saw huge jumps in what they paid monthly. But in a startling development, insurers’ 2026 bids for Part D coverage have surged.

The National Average Monthly Bid Amount (NAMBA) submitted by insurers jumped from $179.45 in 2025 to $239.27 for 2026—a 33% spike. This number isn’t the premium beneficiaries actually pay, but it’s a key formula input used by the Centers for Medicare & Medicaid Services (CMS) to calculate subsidies and plan pricing.

In 2025, the base beneficiary premium was just $36.78—far below the NAMBA. But with a bid increase of this magnitude, the federal government had to intervene. Emergency mechanisms were activated to contain the damage and prevent an immediate spike in what enrollees pay. That intervention may have blunted the immediate pain, but it hasn’t addressed the underlying pressures that are driving the market toward instability.

Ironically, some of today’s disruption stems from a policy meant to protect seniors. The Inflation Reduction Act (IRA), passed in 2022, included several provisions designed to reduce out-of-pocket drug costs. Chief among them was a new $2,000 cap on out-of-pocket spending in Medicare Part D, taking effect in 2025 and rising to $2,100 in 2026.

For the roughly 5% of beneficiaries with extremely high drug costs, that cap is a major relief. But for the other 95%—the majority of enrollees—the redesign has brought less-discussed tradeoffs.

Insurers now shoulder a larger share of costs in the catastrophic coverage phase, which kicks in after a patient hits the spending cap. This fundamentally changed how risk is distributed. As a result, insurers are responding by:

• Increasing deductibles
• Expanding coinsurance requirements
• Raising bids to recover projected losses

While government subsidies are intended to stabilize premiums, they also mask the true cost being shifted to beneficiaries in other ways.

Most seniors understand flat copays. You go to the pharmacy, you pay $10, $20, maybe $45—and you’re done. But a growing share of plans are now leaning on coinsurance instead. Coinsurance means you pay a percentage of the retail price of a drug—often 25% to 33%. This introduces massive variability and risk, especially for costly medications.

Let’s use Eliquis, a blood thinner commonly prescribed to older adults. Retail cost? Over $700 a month.

• With a 25% coinsurance rate: $175/month
• At 33%: $231/month

Contrast that with the typical $47 copay when the drug is treated as a preferred brand. That’s a difference of over $2,000 a year—per medication. And this isn’t limited to specialty drugs. Plans have become more aggressive about tiering, pushing even common medications into higher-cost categories. Seniors accustomed to predictable pricing are walking into volatile cost structures that depend on a plan’s internal formulary logic—not federal regulation.

One way beneficiaries can protect themselves is by switching plans during open enrollment. But that choice is becoming harder each year. In 2024, beneficiaries had access to an average of 22 standalone Part D plans. In 2025, that number dropped to 14. Some counties have even fewer options.

This isn’t just about simplicity—it’s about consolidation. The top five Part D sponsors now control over 74% of enrollment. When market concentration rises this high, competition weakens, pricing converges, and formularies narrow. That leaves less room for plan innovation, less pressure to improve consumer experience, and more rigidity when formulary exclusions create life-or-death issues for patients.

It also makes the idea of “shopping around” less effective, especially for beneficiaries who rely on a narrow set of high-cost prescriptions and need specific pharmacy networks.

The Low-Income Subsidy (LIS) program, often called “Extra Help,” is supposed to shield the most vulnerable Medicare enrollees from steep drug costs. But in 2025, LIS enrollment dropped from 13.7 million to 13.1 million. That may seem modest, but it reverses a multi-year trend.

Why the drop? Partly because of Medicaid “unwinding”—the process of redetermining Medicaid eligibility after pandemic-era protections expired. As people fell off Medicaid rolls, they also lost automatic access to LIS.

That means thousands of seniors now face full premiums, deductibles, and coinsurance without warning. Many won’t realize it until they’re at the pharmacy counter. The decline in LIS participation exposes a cruel irony: just as costs are rising across the board, protections for the most price-sensitive enrollees are disappearing.

Every time premiums jump or coverage narrows, policymakers step in with temporary fixes—subsidies, caps, emergency adjustments to formulas. But each fix papers over the same structural problem: Medicare Part D was not designed to absorb this much cost volatility. The Inflation Reduction Act forced major actuarial changes onto insurers without adjusting the long-term financing framework of Part D. That mismatch is now playing out in bid surges, cost shifting, and back-end government intervention.

Put simply: the program is being held together with financial duct tape.

What makes this crisis especially dangerous is its quietness. Because premiums look stable and headlines are muted, most beneficiaries won’t realize there’s a problem until they’re already in it.

For those navigating the 2026 enrollment window, passivity is no longer an option. Historically, over 70% of Medicare beneficiaries stick with the same drug plan year after year—even when it stops serving their needs. In 2026, that inertia could be costly.

Here’s how to protect yourself:

• Review your Annual Notice of Change (ANOC): These arrive in September and explain how your current plan will change. Don’t ignore it.
• Use Medicare.gov’s Plan Finder: Starting October 1, you can compare plans using your prescription list. Don’t just sort by premium—focus on total out-of-pocket costs.
• Be strategic about high-cost drugs: If your key medication is moving to coinsurance, explore off-plan options like GoodRx, Mark Cuban’s Cost Plus Drugs, or AARP’s discount card.
• Ask questions early: Don’t wait until December. Plan comparison takes time, and agents may be less available due to reduced commissions.
• Stay enrolled even if you buy drugs off-plan: Dropping your plan entirely to “go it alone” could trigger penalties later if you need coverage again.

The open enrollment window runs from October 15 to December 7. Mark your calendar. Your 2026 finances may depend on it.

While seniors are told to “shop smarter,” regulators and lawmakers must confront a deeper truth: Medicare’s structure is showing its age. The Inflation Reduction Act’s goals were noble—but the rollout has exposed flaws in the risk-sharing design of Part D. Emergency interventions can delay pain, not eliminate it. If market forces are pricing in unsustainable premiums, then patchwork subsidies won’t hold the system together forever.

There are a few things Washington must urgently address:

• Stabilizing insurer risk models under the new benefit design
• Reevaluating coinsurance logic to protect against runaway cost-sharing
• Restoring LIS access to those who’ve been disqualified through red tape
• Improving transparency in plan tiering and formulary shifts

Without proactive reform, the federal government will be forced to spend more just to prevent premium chaos—while beneficiaries bear increasing burdens quietly.

The biggest danger in all of this isn’t the cost—it’s the silence. When a system breaks loudly, we respond. But when it breaks quietly—through shifting tiers, hidden coinsurance, or plan exits—it becomes invisible until it’s too late.

That’s the nature of the looming Medicare crisis. The numbers may still look “satisfactory” to actuaries and budget offices. But to retirees trying to budget for life-saving medications, the gap between what’s promised and what’s experienced is growing by the month.

And unless Medicare beneficiaries act now—reshopping plans, reviewing formularies, checking premiums—they may walk straight into a financial hit in January 2026 they never saw coming. This crisis isn’t waiting for headlines. It’s already here. Just quiet enough to ignore—until you can’t.