An Act establishing the Public Option Program and the Public Option Program Fund; and imposing duties on the Insurance Department.

PRINTER'S NO. 2312
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 1863
Session of
2025
INTRODUCED BY WAXMAN, HILL-EVANS, GIRAL, MAYES, FREEMAN, CEPEDA-
FREYTIZ, STEELE, SANCHEZ, FRANKEL AND SCOTT,
SEPTEMBER 15, 2025
REFERRED TO COMMITTEE ON INSURANCE, SEPTEMBER 16, 2025
AN ACT
Establishing the Public Option Program and the Public Option
Program Fund; and imposing duties on the Insurance
Department.
TABLE OF CONTENTS
Chapter 1. Preliminary Provisions
Section 101. Short title.
Section 102. Definitions.
Chapter 3. Public Option Program
Section 301. Establishment of program.
Section 302. Operation of program.
Section 303. Contracts.
Section 304. Qualified health insurance policies.
Section 305. Enrollment.
Section 306. Eligibility.
Section 307. Coverage requirements.
Section 308. Reimbursement rates.
Section 309. Premiums.
Chapter 5. Public Option Program Fund
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Section 501. Establishment of fund.
Section 502. Administration and purposes.
Section 503. Appropriation on continuing basis.
Section 504. Fund sources.
Section 505. Money to remain in fund.
Chapter 7. Miscellaneous Provisions
Section 701. Reports.
Section 702. Effective date.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
CHAPTER 1
PRELIMINARY PROVISIONS
Section 101. Short title.
This act shall be known and may be cited as the Public Option
Program Act.
Section 102. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Covered person." A policyholder, subscriber or other
individual who is entitled to receive health care services under
a health insurance policy.
"Department." The Insurance Department of the Commonwealth.
"Facility." A health care setting or institution providing
health care services, including:
(1) A general, special, psychiatric or rehabilitation
hospital.
(2) An ambulatory surgical facility.
(3) A cancer treatment center.
(4) A birth center.
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(5) A skilled nursing center.
(6) An inpatient, outpatient or residential drug and
alcohol treatment facility.
(7) A facility licensed by the Office of Mental Health
and Substance Abuse Services of the Department of Human
Services.
(8) A laboratory, imaging, diagnostic or other
outpatient medical service or testing facility.
(9) A health care provider office or clinic.
"Fund." The Public Option Program Fund established under
section 501.
"Health care practitioner." As follows:
(1) A licensed hospital or health care facility, medical
equipment supplier or person who is licensed, certified or
otherwise regulated to provide health care services under the
laws of this Commonwealth, including a physician, podiatrist,
optometrist, psychologist, physical therapist, certified
nurse practitioner, registered nurse, nurse midwife,
physician's assistant, chiropractor, dentist, pharmacist or
an individual accredited or certified to provide behavioral
health services.
(2) The term includes an individual providing emergency
services under a licensed emergency medical services agency
as defined in 35 Pa.C.S. § 8103 (relating to definitions).
"Health care service." Any covered treatment, admission,
procedure, medical supplies and equipment or other services,
including behavioral health, prescribed or otherwise provided or
proposed to be provided by a health care provider to a covered
person for the diagnosis, prevention, treatment, cure or relief
of a health condition, illness, injury or disease under the
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terms of a health insurance policy.
"Health insurance policy." As follows:
(1) A policy, subscriber contract, certificate or plan
issued by an insurer that provides medical or health care
coverage.
(2) The term does not include any of the following:
(i) An accident only policy.
(ii) A credit only policy.
(iii) A long-term care or disability income policy.
(iv) A specified disease policy.
(v) A Medicare supplement policy.
(vi) A TRICARE policy, including a Civilian Health
and Medical Program of the Uniformed Services (CHAMPUS)
supplement policy.
(vii) A fixed indemnity policy.
(viii) A hospital indemnity policy.
(ix) A dental only policy.
(x) A vision only policy.
(xi) A workers' compensation policy.
(xii) An automobile medical payment policy under 75
Pa.C.S. (relating to vehicles).
(xiii) A homeowner's insurance policy.
(xiv) Any other similar policies providing for
limited benefits.
"Individual market." The market for health insurance
coverage offered to individuals other than in connection with a
group.
"Insurer." An entity licensed by the department that offers,
issues or renews an individual or group health insurance policy
that is offered or governed under any of the following:
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(1) The act of May 17, 1921 (P.L.682, No.284), known as
The Insurance Company Law of 1921, including section 630 and
Article XXIV of that act.
(2) The act of December 29, 1972 (P.L.1701, No.364),
known as the Health Maintenance Organization Act.
(3) 40 Pa.C.S. Ch. 61 (relating to hospital plan
corporations) or 63 (relating to professional health services
plan corporations).
"Large group market." The market for health insurance
coverage offered through a group health insurance policy for a
group of 51 or more employees, exclusive of dependents.
"Program." The Public Option Program established under
section 301.
"Qualified health plan." As defined in 42 U.S.C. § 18021(a)
(1) (relating to qualified health plan defined).
"Reference premium." For health insurance offered on the
individual market, the second-lowest cost silver plan for a
given zip code, as determined in accordance with 26 CFR 1.36B-
3(f) (relating to computing the premium assistance credit
amount).
"Small group market." The market for health insurance
coverage offered through a group health insurance policy for a
group of at least 1 employee and up to 50 employees, exclusive
of dependents.
CHAPTER 3
PUBLIC OPTION PROGRAM
Section 301. Establishment of program.
The Public Option Program is established within the
department.
Section 302. Operation of program.
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The department shall operate the program for the purposes of
developing and offering health insurance coverage in the
individual market on the exchange established under 40 Pa.C.S.
Ch. 93 (relating to State-based exchange). The department shall
develop and offer health insurance coverage in the small group
market and may develop and offer health insurance coverage in
the large group market in a manner determined by the department.
Section 303. Contracts.
The department may make, execute and deliver contracts or
other arrangements, including interagency agreements with
Commonwealth agencies, to perform activities necessary or
appropriate to further the purposes of this act.
Section 304. Qualified health insurance policies.
(a) Restrictions.--The department may limit the availability
of individual market health insurance policies offered through
the program by restricting the availability of the policies on
the exchange established under 40 Pa.C.S. Ch. 93 (relating to
State-based exchange).
(b) Compliance.--If individual market health insurance
policies are available for purchase on the exchange established
under 40 Pa.C.S. Ch. 93, the health insurance policies shall
comply with all Federal and State law applicable to qualified
health plans.
Section 305. Enrollment.
(a) Health care practitioners.--A health care practitioner
may enroll as a participating health care practitioner with the
program.
(b) Facilities.--A facility may enroll as a participating
facility with the program.
Section 306. Eligibility.
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(a) Individual market health insurance policies.--
(1) For individual market health insurance policies
offered through the program, which are available on the
exchange established under 40 Pa.C.S. Ch. 93 (relating to
State-based exchange), an individual may only enroll in the
health insurance policy if the individual satisfies the
eligibility criteria specified in 45 CFR 155.305 (relating to
eligibility standards).
(2) The department may establish eligibility criteria
for individual market health insurance policies offered
through the program which are not available for purchase
through the exchange established under 40 Pa.C.S. Ch. 93.
(b) Small group market and large group market health
insurance policies.--The department may establish eligibility
criteria for groups to purchase small group market or large
group market health insurance policies through the program.
Section 307. Coverage requirements.
(a) Components.--Health insurance policies offered through
the program shall provide coverage for all of the following:
(1) Essential health benefits inclusive of:
(i) Ambulatory patient services.
(ii) Emergency services.
(iii) Hospitalization.
(iv) Maternity and newborn care.
(v) Mental health and substance use disorder
services, including behavioral health treatment.
(vi) Prescription drugs.
(vii) Rehabilitative and habilitative services and
devices.
(viii) Laboratory services.
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(ix) Preventive and wellness services and chronic
disease management.
(x) Pediatric services, including oral and vision
care.
(2) Dependents up to 26 years of age.
(3) Dental benefits.
(4) Vision benefits.
(5) Spousal or domestic partner coverage.
(b) Different levels of coverage.--Health insurance policies
offered by the program shall provide different levels of
coverage in accordance with 42 U.S.C. § 18022(d) (relating to
essential health benefits requirements).
(c) Compliance.--Except as provided in subsections (a) and
(b), health insurance policies offered through the program must
comply with all relevant Federal or State law governing health
insurance policies issued in the individual market, small group
market or large group market, as applicable.
Section 308. Reimbursement rates.
The total amount that an individual or small group or large
group health insurance policy reimburses providers and
facilities for all covered benefits under the health insurance
policy may not exceed 160% of the total amount Medicare would
reimburse providers and facilities for the same or similar
services in the Statewide aggregate.
Section 309. Premiums.
The premiums for individual market health insurance policies
offered in a zip code or small group and large group health
insurance policies offered in a geographic region through the
program shall be at least:
(1) Five percent lower than the reference premium for
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the zip code or geographic region for the first year of
implementation.
(2) Ten percent lower than the reference premium for the
zip code or geographic region for the second year of
implementation.
(3) Twelve and five-tenths percent lower than the
reference premium for the zip code or geographic region for
the third year of implementation.
(4) Fifteen percent lower than the reference premium for
the zip code or geographic region for the fourth year of
implementation and in any subsequent years of the program's
operation.
CHAPTER 5
PUBLIC OPTION PROGRAM FUND
Section 501. Establishment of fund.
The Public Option Program Fund is established in the State
Treasury.
Section 502. Administration and purposes.
The department shall administer the fund to implement and
administer the program and provide for the payment of expenses
associated with staffing requirements.
Section 503. Appropriation on continuing basis.
Money in the fund and the interest accruing on the money in
the fund are appropriated on a continuing basis to the
department for the purposes described in section 502.
Section 504. Fund sources.
The department may solicit and accept money for the purposes
described in section 502, including money appropriated by the
General Assembly, grants, donations, gifts and other payments
from any source, which shall be deposited into the fund.
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Section 505. Money to remain in fund.
Any money remaining in the fund at the end of each fiscal
year, including interest accruing on the money in the fund,
shall not revert to the General Fund but shall remain in the
fund.
CHAPTER 7
MISCELLANEOUS PROVISIONS
Section 701. Reports.
(a) Annual report required.--No later than the first
September 1 that is at least 365 days after the effective date
of this subsection and each September 1 thereafter, the
department shall compile an annual report detailing the
effectiveness of the program.
(b) Contents.--Each annual report under this section must
include the following:
(1) The number of individuals enrolled who received
health insurance coverage under the program.
(2) Demographic information about the individuals
receiving health insurance coverage under the program.
(3) Program premiums.
(4) Funding used to operate the program.
(5) The money remaining in the fund.
(c) Distribution.--Each annual report under this section
shall be distributed to:
(1) The President pro tempore of the Senate.
(2) The Speaker of the House of Representatives.
(3) The Majority Leader and the Minority Leader of the
Senate.
(4) The Majority Leader and the Minority Leader of the
House of Representatives.
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(5) The chairperson and minority chairperson of the
Banking and Insurance Committee of the Senate.
(6) The chairperson and minority chairperson of the
Insurance Committee of the House of Representatives.
(7) The chairperson and minority chairperson of the
Health and Human Services Committee of the Senate.
(8) The chairperson and minority chairperson of the
Health Committee of the House of Representatives.
(9) The chairperson and minority chairperson of the
Human Services Committee of the House of Representatives.
(d) Posting.--Each annual report under this section shall be
posted on the publicly accessible Internet website of the
department.
Section 702. Effective date.
This act shall take effect as follows:
(1) Chapter 3 shall take effect in 365 days.
(2) The remainder of this act shall take effect
immediately.
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