Medicare Part D plans bid 2026 at a national average monthly bid amount of $239.27, implying a 35% per-enrollee cost increase against CBO's projected 5%. If those bid levels hold, federal Part D spending over the next decade runs roughly $500 billion above prior projections.
The February 2026 baseline booked $0.6 trillion of additional Part D outlays for 2025 to 2035. CBO also published a formal call for outside research, which is the more telling document.
Key Takeaways
- The 2026 NAMBA is $239.27, up 33% from $179.45, against a CBO projection of roughly 5% per-enrollee growth, following misses of 20% in 2024 and 42% in 2025.
- Plan sponsor liability in the catastrophic phase went from 15% to 60% on brand drugs while beneficiary cost sharing went to zero above the $2,000 cap.
- CMS reinsurance payments fell from 46% of total Part D spending in 2024 to 17% in 2025, which is the transfer in one figure.
- Catastrophic phase utilization is running about 22% above the Milliman and Wakely base cases, concentrated in GLP-1 adherence, oncology regimen completion and autoimmune biologic continuation.
- Standalone PDPs are down 55% since the IRA to 360 for 2026, and five companies now account for 94% of them, which is the competitive discipline CBO says may be missing from the bids.
The Bids Are Not Drifting, They Are Stepping
The national average monthly bid amount is the enrollment-weighted average of plan bids for basic benefits, and it is what CMS uses to set the direct subsidy per member.
It was $64.28 in 2024. It reached $179.45 in 2025, up $115.17 or 179%. For 2026 it is $239.27, up another $59.82 or 33%. CBO expected roughly 20% per-enrollee growth into 2024, saw 42% in 2025, and projected 5% for 2026 against an actual 35%.
The 2025 step was structural and partly anticipated: the Inflation Reduction Act eliminated the coverage gap, introduced the $2,000 out-of-pocket cap, and moved catastrophic phase liability off federal reinsurance. What was not anticipated was the size, and the 2026 print says the step has not settled.
CBO's February 2026 baseline added $0.6 trillion to projected Part D outlays for 2025 through 2035, the largest single-program upward technical revision in the cycle, and the agency published a research call asking external actuaries and economists to explain the divergence. A nonpartisan scoring agency asking the outside world why its model is wrong is itself a finding.
Where the Liability Went
The mechanical driver is a reallocation, not a price increase.
| Catastrophic Phase Liability | Pre-2025 | Post-2025 |
|---|---|---|
| Federal reinsurance (non-applicable drugs) | 80% | 40% |
| Federal reinsurance (applicable/brand drugs) | 80% | 20% |
| Plan sponsor liability | 15% | 60% |
| Beneficiary cost sharing | 5% | 0% (capped at $2,000 annually) |
| Manufacturer discount (applicable drugs) | N/A in catastrophic | 20% |
The pre-2025 structure put 80% of catastrophic phase cost on federal reinsurance, 15% on plans and 5% on the beneficiary. After the redesign, plan sponsors carry 60% on brand drugs and beneficiaries carry nothing above the cap. CMS aggregate reinsurance payments accordingly fell from 46% of total Part D spending in 2024 to 17% in 2025.
That reallocation is why the NAMBA moved from $64.28 to $179.45 in a single year. Plans absorbed liability previously spread across the federal government and the beneficiary, and the bid is where that shows up.
The pricing consequence is that specialty drug volume now hits plan costs through a much larger multiplier. A 10% increase in specialty volume concentrates in the catastrophic phase, where the plan share went from 15% to 60% of the marginal dollar, so the same utilization movement produces roughly four times the plan-level cost it would have under the prior design. Trend assumptions carried over from pre-redesign experience understate it structurally rather than by a calibration margin.
The behavioural half compounds it. Removing the 5% coinsurance above the cap removed the price signal that constrained catastrophic phase utilization, and first-year data shows that phase running approximately 22% above the Milliman and Wakely base cases. The direction was modelled; the magnitude was not.
GLP-1s are the visible case. Part D processed 21.8 million GLP-1 claims for $27.5 billion in gross spending in 2024, and after CMS dropped the BALANCE model for 2027 it extended the Medicare GLP-1 Bridge program through December 31, 2027 at a $50 monthly copay. Each million new Medicare GLP-1 users implies about $1.74 billion a year at the $245 negotiated price, or $890 million at the $149 starter dose.
Nor is the growth price-driven, which limits what rebate negotiation can recover. US net prescription drug spending grew 11.4% in 2024 to $487 billion against 4.9% in 2023, and the ASHP survey put overall pharmaceutical expenditure growth at 10.2% to $805.9 billion, of which utilization contributed 7.9% and new introductions 2.5% while existing drug prices were essentially flat.
The Part CBO Cannot Separate
The third force is the one that makes the first two hard to size, and it is why the research call exists.
The standalone PDP market has contracted 55% since the IRA passed, to a record low 360 plans for 2026 from 464 in 2025. Cigna, Clear Spring Health, Elevance Health and Mutual of Omaha have exited, and five companies, Aetna, Health Care Service Corporation, Humana, UnitedHealthcare and Wellcare, now account for 94% of all PDPs. A typical beneficiary sees eight to twelve options for 2026 against twelve to sixteen in 2025.
CBO's own language is careful: historically strong competition kept profit margins low, and recent instability "may be leading to less competition and higher profit margins." That is the standard consolidation dynamic, and it means part of the bid increase may be margin rather than expected cost.
The administrative line makes the ambiguity concrete. CMS revised its estimate of insurer overhead for 2026 from 6.5% to 11.4% of net benefit costs, close to a doubling. Some of that is genuine operational complexity under a redesigned benefit carrying new liability. Some of it may be margin sitting inside an administrative assumption, and CBO flagged the decomposition as exactly what it cannot do from the outside.
CMS has been treating the symptom meanwhile. The Part D Premium Stabilization Demonstration for 2026 cut the uniform base beneficiary premium reduction from $15 to $10, raised the allowable premium increase limit from $35 to $50, and dropped the narrowed risk corridor thresholds. The base beneficiary premium still rose 6% to $38.99 from $36.78.
So beneficiary premiums moved 6% while the bid moved 33%. The federal direct subsidy absorbs the difference, which is the $500 billion, and the agency scoring it has said it cannot currently tell how much of that gap is cost.
Further Reading
- Medicare Part D 2026: Year-One Redesign Data Flips Key Actuarial Assumptions - The first full year of CMS Part D financial data under the IRA redesign, showing 14% unfavorable bid variance and 22% catastrophic phase utilization overshoot that quantifies the emerging experience underlying the CBO spending gap.
- Stop-Loss Carriers Rewrite GLP-1 Rules at 2026 Renewals - How GLP-1 cost pressures are manifesting in the employer-sponsored market through stop-loss carve-outs and lasers, paralleling the Part D catastrophic phase utilization surprise.
- CMS 2027 Medicare Advantage Rate Reversal: What 2.48% Means for Plan Actuaries - The MA payment rate environment that interacts with Part D bid construction for MA-PD plans, where the drug cost overshoot reduces margin available for supplemental benefits.
- ACA Benchmark Premiums Jump 21.7% in Largest Surge Since 2018 - The broader premium inflation context across federal health programs, with GLP-1 pharmacy costs driving rate increases in both ACA marketplace filings and Part D bids.
- ACA 2027 Rate Filings: Pricing Actuaries Face a GLP-1 Credibility Problem - How the GLP-1 credibility challenge manifests in ACA rate filings, with methodology parallels to the Part D bid construction problem described in this article.
- The Medicare GLP-1 Bridge and Its $50 Copay Structure - How the Section 402 demonstration bypasses Part D benefit phases entirely, removing GLP-1 obesity drugs from plan-level risk while creating second-order modeling challenges for 2027 bid construction and the 2028 coverage cliff.
- Explainable AI Wins the CMS Fraud Detection Competition - Milliman’s glass-box approach to Medicare FWA detection and the $2B FDOC savings that demonstrate the payment integrity upside as Part D spending grows.
- IRA Raises Employer Plan Creditable Coverage Threshold to 72% - The employer-side impact of the Part D benefit enrichment, where the same actuarial value increase driving the spending gap forces a 12 percentage point jump in the creditable coverage simplified determination threshold.
Sources
- Congressional Budget Office: A Call for New Research in the Area of Spending on Medicare Part D - The 35% vs. 5% bid discrepancy, $500 billion spending gap projection, and six research areas CBO identified.
- CBO February 2026 Baseline Projections: Medicare - The $0.6 trillion upward revision to Part D outlays for 2025-2035.
- Committee for a Responsible Federal Budget: CBO Projects High Federal Health Program Costs - Analysis of the February 2026 baseline revisions and fiscal context.
- CMS: 2026 Medicare Part D Bid Information and Premium Stabilization Demonstration Parameters - NAMBA of $239.27, base beneficiary premium of $38.99, and demonstration parameter updates.
- CMS: Contract Year 2027 Medicare Advantage and Part D Final Rule (April 2, 2026) - Codification of the redesigned Part D benefit structure for 2027 and beyond.
- CMS: Final CY 2025 Part D Redesign Program Instructions - Catastrophic phase liability percentages, reinsurance changes, and Manufacturer Discount Program mechanics.
- KFF: What to Know About the BALANCE Model for GLP-1s in Medicare and Medicaid - BALANCE model structure, $245 negotiated price, and plan sponsor participation dynamics.
- CMS: Medicare GLP-1 Bridge Program - Bridge extension through December 2027, eligible medications, and $50 copay structure.
- IQVIA: Understanding the Use of Medicines in the U.S. 2025 - 11.4% net drug spending growth in 2024, GLP-1 accounting for 29% of spending growth.
- Drug Channels: Medicare Part D 2026 PDP Market Analysis - 55% decline in standalone PDPs since IRA passage, five-company 94% market share concentration.
- PMC/JAMA Network Open: Fiscal Impact of Expanded Medicare Coverage for GLP-1 Receptor Agonists to Treat Obesity - $65.9 billion ten-year cost projection for 30 million eligible beneficiaries, $18.2 billion healthcare savings offset.
- CBO: How Would Authorizing Medicare to Cover Anti-Obesity Medications Affect the Federal Budget? - $35 billion estimated spending increase from 2026 through 2034.