Fewer Choices. Lower Quality. Higher Costs.
The stand-alone Prescription Drug Plan (PDP) market choice has collapsed by 55%, going from 801 to 360 plans from 2023–2026.1,2 A major driver is the Inflation Reduction Act (IRA) of 2022. Unlike prior years, the IRA shifted a huge amount of drug-cost risk onto drug plans, contributing to insurers dropping and consolidating plans.² Star Ratings, Medicare’s 1-to-5-star measure of plan quality and performance, dropped by 7.4% over the same period.³ The 2027 deductible is up to $700 and the maximum out of pocket is $2,400.⁴ Lastly, the extra premium subsidy disappears at the end of this year, likely causing an increase in premiums.5,6 That’s bad math. The verdict? We predict even fewer choices and higher costs in 2027.
Could there be other causes? Sure, but the pre-IRA evidence shows these same issues were happening without causing a national collapse in drug plan choices.⁷⸴⁸
- Insurer Exits? Not enough to explain it. No widespread exodus from 2019–2021. In fact, PDP choices actually increased.7,8
- Consolidation & Mergers? Nope. Despite significant consolidation from 2019–2021, plan choices increased from 901 to 996.7,8
- Company-Specific Strategic Decisions? Still doesn’t corelate. In 2020, Humana reorganized its Part D plans, causing about 1.9 million members to be moved into coverage that cost roughly twice as much per month. A new lower-cost option was available, but members had to actively switch to it.⁹ Same story: PDP choices went up despite a major company-specific change.⁸
- Quality Problems? Not before the decline in choices. PDP Star Ratings actually improved 7.2% from 2019–2021.10,11
So, from 2019–2021, the stand-alone PDP market actually expanded by 10.5% and Star Ratings improved by 7.2%.⁷⸴⁸⸴¹⁰⸴¹¹ Even though the same dynamics listed above were occurring, choices and quality improved. Monthly premiums were also remarkably stable, without the extra subsidy later added for 2025 and 2026.⁵⸴¹²
What about 2022? It’s too much for a footnote. 2022 is excluded from the trend analysis because it was a documented structural outlier due to Cigna and Centene consolidating overlapping national PDPs, representing about 87% of the decline. Enrollees were transferred to other plans from the same insurers. The companies didn’t just disappear.¹³ Of note is that plan choices rebounded from 766 in 2022 to 801 in 2023, further suggesting that 2022 is an outlier rather than the beginning of the later decline.¹⸴¹³
What to do? With fewer plan choices, lower overall quality and likely higher costs, carefully review the Annual Notice of Change your insurance company sends to you in September.¹⁴ Beginning October 1, check Medicare.gov to make sure your drugs are covered, compare your expected costs, and know your options. You can make changes during Medicare Open Enrollment from October 15–December 7.¹⁵
P.S. If you’re pairing your drug plan with a Medicare supplement that is also getting too costly, it might be time to switch to a Medicare Advantage plan. Schedule a free consultation to see if it’s right for you.
Sources
¹ KFF — Medicare Part D: A First Look at Medicare Drug Plans in 2023.
² KFF — Medicare Part D Premiums Are Decreasing for Many Stand-Alone Drug Plans in a Number of States in 2026.
³ Centers for Medicare & Medicaid Services— 2026 Medicare Advantage and Part D Star Ratings Fact Sheet.
⁴ Centers for Medicare & Medicaid Services — Announcement of Calendar Year (CY) 2027 Medicare Advantage Capitation Rates and Part C and Part D Payment Policies.
⁵ KFF — CMS’s Decision to End Temporary Subsidies to Medicare’s Stand-Alone Drug Plans Could Mean Larger Premium Increases for Some Beneficiaries Next Year.
⁶ Centers for Medicare & Medicaid Services — Medicare Part D 2027 National Average Monthly Bid Amount Information.
⁷ KFF — Medicare Part D: A First Look at Prescription Drug Plans in 2019.
⁸ KFF — Medicare Part D: A First Look at Medicare Prescription Drug Plans in 2021.
⁹ KFF — Medicare Part D: A First Look at Prescription Drug Plans in 2020.
¹⁰ Centers for Medicare & Medicaid Services — 2020 Medicare Star Ratings.
¹¹ Centers for Medicare & Medicaid Services — 2021 Medicare Advantage and Part D Star Ratings.
¹² KFF State Health Facts — Weighted Average Monthly Premium for Medicare Part D Stand-Alone Prescription Drug Plans.
¹³ KFF — Medicare Part D: A First Look at Medicare Prescription Drug Plans in 2022.
¹⁴ Medicare.gov — Plan Annual Notice of Change (ANOC)
¹⁵ Medicare.gov — Medicare & You / Important Medicare Dates.
