I 

112TH CONGRESS 

1ST SESSION H. R. 191 

To amend the Patient Protection and Affordable Care Act to establish a 

public health insurance option. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 5, 2011 

Ms. WOOLSEY (for herself, Mr. GEORGE MILLER of California, Ms. 

SCHAKOWSKY, Mr. CONYERS, Mr. STARK, Mr. OLVER, Ms. LEE of California, Ms. MOORE, Mr. FRANK of Massachusetts, Mr. ENGEL, Mr. 

JOHNSON of Georgia, Ms. EDWARDS, Mr. HINCHEY, Ms. ZOE LOFGREN

of California, Mr. HONDA, Mr. ACKERMAN, Mr. MURPHY of Connecticut, 

Mr. WEINER, Mr. ELLISON, Mr. CAPUANO, Ms. MATSUI, Mr. 

GARAMENDI, Mr. ROTHMAN of New Jersey, Ms. DELAURO, Mr. SARBANES, Ms. HIRONO, Mr. FATTAH, Mr. SCOTT of Virginia, Ms. RICHARDSON, Mr. NADLER, Mr. FARR, Ms. PINGREE of Maine, Mr. FILNER, Mr. 

HASTINGS of Florida, Ms. JACKSON LEE of Texas, Mr. RYAN of Ohio, 

Ms. BALDWIN, Mr. TONKO, Ms. SLAUGHTER, Mr. GUTIERREZ, Mr. 

HOLT, Mr. GRIJALVA, Ms. TSONGAS, Mr. LUJAN, Mr. HIGGINS, Mr. 

THOMPSON of California, and Mr. COHEN) introduced the following bill; 

which was referred to the Committee on Energy and Commerce 

A BILL 

To amend the Patient Protection and Affordable Care Act 

to establish a public health insurance option. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 


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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Public Option Deficit 

3 Reduction Act’’. 

4 SEC. 2. PUBLIC HEALTH INSURANCE OPTION. 

5 (a) IN GENERAL.—Part III of subtitle D of title I 

6 of the Patient Protection and Affordable Care Act (Public 

7 Law 111–148) is amended by adding at the end the fol8 lowing new section: 

9 ‘‘SEC. 1325. PUBLIC HEALTH INSURANCE OPTION. 

10 ‘‘(a) ESTABLISHMENT AND ADMINISTRATION OF A

11 PUBLIC HEALTH INSURANCE OPTION.— 

12 ‘‘(1) ESTABLISHMENT.—For years beginning 

13 with 2014, the Secretary of Health and Human 

14 Services (in this subtitle referred to as the ‘Sec15 retary’) shall provide for the offering through Ex16 changes established under this title of a health bene17 fits plan (in this Act referred to as the ‘public health 

18 insurance option’) that ensures choice, competition, 

19 and stability of affordable, high-quality coverage 

20 throughout the United States in accordance with 

21 this section. In designing the option, the Secretary’s 

22 primary responsibility is to create a low-cost plan 

23 without compromising quality or access to care. 

24 ‘‘(2) OFFERING THROUGH EXCHANGES.— 

25 ‘‘(A) EXCLUSIVE TO EXCHANGES.—The 

26 public health insurance option shall only be 


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1 made available through Exchanges established 

2 under this title. 

3 ‘‘(B) ENSURING A LEVEL PLAYING

4 FIELD.—Consistent with this section, the public 

5 health insurance option shall comply with re6 quirements that are applicable under this title 

7 to health benefits plans offered through such 

8 Exchanges, including requirements related to 

9 benefits, benefit levels, provider networks, no10 tices, consumer protections, and cost sharing. 

11 ‘‘(C) PROVISION OF BENEFIT LEVELS.— 

12 The public health insurance option— 

13 ‘‘(i) shall offer bronze, silver, and gold 

14 plans; and 

15 ‘‘(ii) may offer platinum plans. 

16 ‘‘(3) ADMINISTRATIVE CONTRACTING.—The 

17 Secretary may enter into contracts for the purpose 

18 of performing administrative functions (including 

19 functions described in subsection (a)(4) of section 

20 1874A of the Social Security Act) with respect to 

21 the public health insurance option in the same man22 ner as the Secretary may enter into contracts under 

23 subsection (a)(1) of such section. The Secretary has 

24 the same authority with respect to the public health 

25 insurance option as the Secretary has under subVerDate Mar 15 2010 01:52 Jan 12, 2011 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H191.IH H191

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1 sections (a)(1) and (b) of section 1874A of the So2 cial Security Act with respect to title XVIII of such 

3 Act. Contracts under this subsection shall not in4 volve the transfer of insurance risk to such entity. 

5 ‘‘(4) OMBUDSMAN.—The Secretary shall estab6 lish an office of the ombudsman for the public 

7 health insurance option which shall have duties with 

8 respect to the public health insurance option similar 

9 to the duties of the Medicare Beneficiary Ombuds10 man under section 1808(c)(2) of the Social Security 

11 Act. In addition, such office shall work with States 

12 to ensure that information and notice is provided 

13 that the public health insurance option is one of the 

14 health plans available through an Exchange. 

15 ‘‘(5) DATA COLLECTION.—The Secretary shall 

16 collect such data as may be required to establish 

17 premiums and payment rates for the public health 

18 insurance option and for other purposes under this 

19 section, including to improve quality and to reduce 

20 racial, ethnic, and other disparities in health and 

21 health care. 

22 ‘‘(6) ACCESS TO FEDERAL COURTS.—The provi23 sions of Medicare (and related provisions of title II 

24 of the Social Security Act) relating to access of 

25 Medicare beneficiaries to Federal courts for the enVerDate Mar 15 2010 01:52 Jan 12, 2011 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H191.IH H191

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1 forcement of rights under Medicare, including with 

2 respect to amounts in controversy, shall apply to the 

3 public health insurance option and individuals en4 rolled under such option under this title in the same 

5 manner as such provisions apply to Medicare and 

6 Medicare beneficiaries. 

7 ‘‘(b) PREMIUMS AND FINANCING.— 

8 ‘‘(1) ESTABLISHMENT OF PREMIUMS.— 

9 ‘‘(A) IN GENERAL.—The Secretary shall 

10 establish geographically adjusted premium rates 

11 for the public health insurance option— 

12 ‘‘(i) in a manner that complies with 

13 the premium rules under paragraph (3); 

14 and 

15 ‘‘(ii) at a level sufficient to fully fi16 nance the costs of— 

17 ‘‘(I) health benefits provided by 

18 the public health insurance option; 

19 and 

20 ‘‘(II) administrative costs related 

21 to operating the public health insur22 ance option. 

23 ‘‘(B) CONTINGENCY MARGIN.—In estab24 lishing premium rates under subparagraph (A), 


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1 the Secretary shall include an appropriate 

2 amount for a contingency margin. 

3 ‘‘(2) ACCOUNT.— 

4 ‘‘(A) ESTABLISHMENT.—There is estab5 lished in the Treasury of the United States an 

6 account for the receipts and disbursements at7 tributable to the operation of the public health 

8 insurance option, including the start-up funding 

9 under subparagraph (B). Section 1854(g) of 

10 the Social Security Act shall apply to receipts 

11 described in the previous sentence in the same 

12 manner as such section applies to payments or 

13 premiums described in such section. 

14 ‘‘(B) START-UP FUNDING.— 

15 ‘‘(i) IN GENERAL.—In order to pro16 vide for the establishment of the public 

17 health insurance option there is hereby ap18 propriated to the Secretary, out of any 

19 funds in the Treasury not otherwise appro20 priated, $2,000,000,000. In order to pro21 vide for initial claims reserves before the 

22 collection of premiums, there is hereby ap23 propriated to the Secretary, out of any 

24 funds in the Treasury not otherwise appro25 priated, such sums as necessary to cover 


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1 90 days worth of claims reserves based on 

2 projected enrollment. 

3 ‘‘(ii) AMORTIZATION OF START-UP

4 FUNDING.—The Secretary shall provide for 

5 the repayment of the startup funding pro6 vided under clause (i) to the Treasury in 

7 an amortized manner over the 10-year pe8 riod beginning with 2014. 

9 ‘‘(iii) LIMITATION ON FUNDING.— 

10 Nothing in this subsection shall be con11 strued as authorizing any additional appro12 priations to the account, other than such 

13 amounts as are otherwise provided with re14 spect to other health benefits plans partici15 pating under the Exchange involved. 

16 ‘‘(3) INSURANCE RATING RULES.—The pre17 mium rate charged for the public health insurance 

18 option may not vary except as provided under sec19 tion 2701 of the Public Health Service Act. 

20 ‘‘(c) PAYMENT RATES FOR ITEMS AND SERVICES.— 

21 ‘‘(1) RATES ESTABLISHED BY SECRETARY.— 

22 ‘‘(A) IN GENERAL.—The Secretary shall 

23 establish payment rates for the public health in24 surance option for services and health care pro25 viders consistent with this subsection and may 


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1 change such payment rates in accordance with 

2 subsection (d). 

3 ‘‘(B) INITIAL PAYMENT RULES.— 

4 ‘‘(i) IN GENERAL.—During 2014, 

5 2015, and 2016, the Secretary shall set 

6 the payment rates under this subsection 

7 for services and providers described in sub8 paragraph (A) equal to the payment rates 

9 for equivalent services and providers under 

10 parts A and B of Medicare, subject to 

11 clause (ii), paragraphs (2)(A) and (4), and 

12 subsection (d). 

13 ‘‘(ii) EXCEPTIONS.— 

14 ‘‘(I) PRACTITIONERS’ SERV15 ICES.—Payment rates for practi16 tioners’ services otherwise established 

17 under the fee schedule under section 

18 1848 of the Social Security Act shall 

19 be applied without regard to the pro20 visions under subsection (f) of such 

21 section and the update under sub22 section (d)(4) under such section for a 

23 year as applied under this paragraph 

24 shall be not less than 1 percent. 


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1 ‘‘(II) ADJUSTMENTS.—The Sec2 retary may determine the extent to 

3 which Medicare adjustments applica4 ble to base payment rates under parts 

5 A and B of Medicare for graduate 

6 medical education and dispropor7 tionate share hospitals shall apply 

8 under this section. 

9 ‘‘(C) FOR NEW SERVICES.—The Secretary 

10 shall modify payment rates described in sub11 paragraph (B) in order to accommodate pay12 ments for services, such as well-child visits, that 

13 are not otherwise covered under Medicare. 

14 ‘‘(D) PRESCRIPTION DRUGS.—Payment 

15 rates under this subsection for prescription 

16 drugs that are not paid for under part A or 

17 part B of Medicare shall be at rates negotiated 

18 by the Secretary. 

19 ‘‘(2) INCENTIVES FOR PARTICIPATING PRO20 VIDERS.— 

21 ‘‘(A) INITIAL INCENTIVE PERIOD.— 

22 ‘‘(i) IN GENERAL.—The Secretary 

23 shall provide, in the case of services de24 scribed in clause (ii) furnished during 

25 2014, 2015, and 2016, for payment rates 


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1 that are 5 percent greater than the rates 

2 established under paragraph (1). 

3 ‘‘(ii) SERVICES DESCRIBED.—The 

4 services described in this clause are items 

5 and professional services, under the public 

6 health insurance option by a physician or 

7 other health care practitioner who partici8 pates in both Medicare and the public 

9 health insurance option. 

10 ‘‘(iii) SPECIAL RULES.—A pediatrician 

11 and any other health care practitioner who 

12 is a type of practitioner that does not typi13 cally participate in Medicare (as deter14 mined by the Secretary) shall also be eligi15 ble for the increased payment rates under 

16 clause (i). 

17 ‘‘(B) SUBSEQUENT PERIODS.—Beginning 

18 with 2017 and for subsequent years, the Sec19 retary shall continue to use an administrative 

20 process to set such rates in order to promote 

21 payment accuracy, to ensure adequate bene22 ficiary access to providers, and to promote af23 fordability and the efficient delivery of medical 

24 care consistent with subsection (a)(1). Such 

25 rates shall not be set at levels expected to inVerDate Mar 15 2010 01:52 Jan 12, 2011 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H191.IH H191

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1 crease average medical costs per enrollee cov2 ered under the public health insurance option 

3 beyond what would be expected if the process 

4 under paragraph (1)(B) and subparagraph (A) 

5 were continued, as certified by the Office of the 

6 Actuary of the Centers for Medicare & Medicaid 

7 Services. 

8 ‘‘(C) ESTABLISHMENT OF A PROVIDER

9 NETWORK.—Health care providers participating 

10 under Medicare are participating providers in 

11 the public health insurance option unless they 

12 opt out in a process established by the Sec13 retary. 

14 ‘‘(3) ADMINISTRATIVE PROCESS FOR SETTING

15 RATES.—Chapter 5 of title 5, United States Code 

16 shall apply to the process for the initial establish17 ment of payment rates under this subsection but not 

18 to the specific methodology for establishing such 

19 rates or the calculation of such rates. 

20 ‘‘(4) CONSTRUCTION.—Nothing in this section 

21 shall be construed as limiting the Secretary’s author22 ity to correct for payments that are excessive or defi23 cient, taking into account the provisions of sub24 section (a)(1) and any appropriate adjustments 

25 based on the demographic characteristics of enrollees 


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1 covered under the public health insurance option, 

2 but in no case shall the correction of payments 

3 under this paragraph result in a level of expendi4 tures per enrollee that exceeds the level of expendi5 tures that would have occurred under paragraphs 

6 (1)(B) and (2)(A), as certified by the Office of the 

7 Actuary of the Centers for Medicare & Medicaid 

8 Services. 

9 ‘‘(5) CONSTRUCTION.—Nothing in this section 

10 shall be construed as affecting the authority of the 

11 Secretary to establish payment rates, including pay12 ments to provide for the more efficient delivery of 

13 services, such as the initiatives provided for under 

14 subsection (d). 

15 ‘‘(6) LIMITATIONS ON REVIEW.—There shall be 

16 no administrative or judicial review of a payment 

17 rate or methodology established under this sub18 section or under subsection (d). 

19 ‘‘(d) MODERNIZED PAYMENT INITIATIVES AND DE20 LIVERY SYSTEM REFORM.— 

21 ‘‘(1) IN GENERAL.—For plan years beginning 

22 with 2014, the Secretary may utilize innovative pay23 ment mechanisms and policies to determine pay24 ments for items and services under the public health 

25 insurance option. The payment mechanisms and 


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1 policies under this subsection may include patient2 centered medical home and other care management 

3 payments, accountable care organizations, value4 based purchasing, bundling of services, differential 

5 payment rates, performance or utilization based pay6 ments, partial capitation, and direct contracting with 

7 providers. Payment rates under such payment mech8 anisms and policies shall not be set at levels ex9 pected to increase average medical costs per enrollee 

10 covered under the public health insurance option be11 yond what would be expected if the process under 

12 paragraphs (1)(B) and (2)(A) of subsection (c) were 

13 continued, as certified by the Office of the Actuary 

14 of the Centers for Medicare & Medicaid Services. 

15 ‘‘(2) REQUIREMENTS FOR INNOVATIVE PAY16 MENTS.—The Secretary shall design and implement 

17 the payment mechanisms and policies under this 

18 subsection in a manner that— 

19 ‘‘(A) seeks to— 

20 ‘‘(i) improve health outcomes; 

21 ‘‘(ii) reduce health disparities (includ22 ing racial, ethnic, and other disparities); 

23 ‘‘(iii) provide efficient and affordable 

24 care; 


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1 ‘‘(iv) address geographic variation in 

2 the provision of health services; or 

3 ‘‘(v) prevent or manage chronic ill4 ness; and 

5 ‘‘(B) promotes care that is integrated, pa6 tient-centered, high-quality, and efficient. 

7 ‘‘(3) ENCOURAGING THE USE OF HIGH VALUE

8 SERVICES.—To the extent allowed by the benefit 

9 standards applied to all health benefits plans partici10 pating under the Exchange involved, the public 

11 health insurance option may modify cost sharing and 

12 payment rates to encourage the use of services that 

13 promote health and value. 

14 ‘‘(4) NON-UNIFORMITY PERMITTED.—Nothing 

15 in this subtitle shall prevent the Secretary from 

16 varying payments based on different payment struc17 ture models (such as accountable care organizations 

18 and medical homes) under the public health insur19 ance option for different geographic areas. 

20 ‘‘(e) PROVIDER PARTICIPATION.— 

21 ‘‘(1) IN GENERAL.—The Secretary shall estab22 lish conditions of participation for health care pro23 viders under the public health insurance option. 

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1 ticipate in the public health insurance option unless 

2 such provider is appropriately licensed or certified 

3 under State law. 

4 ‘‘(3) PAYMENT TERMS FOR PROVIDERS.— 

5 ‘‘(A) PHYSICIANS.—The Secretary shall 

6 provide for the annual participation of physi7 cians under the public health insurance option, 

8 for which payment may be made for services 

9 furnished during the year, in one of 2 classes: 

10 ‘‘(i) PREFERRED PHYSICIANS.—Those 

11 physicians who agree to accept the pay12 ment rate established under this section 

13 (without regard to cost-sharing) as the 

14 payment in full. 

15 ‘‘(ii) PARTICIPATING, NON-PRE16 FERRED PHYSICIANS.—Those physicians 

17 who agree not to impose charges (in rela18 tion to the payment rate described in sub19 section (c) for such physicians) that exceed 

20 the ratio permitted under section 

21 1848(g)(2)(C) of the Social Security Act. 

22 ‘‘(B) OTHER PROVIDERS.—The Secretary 

23 shall provide for the participation (on an annual 

24 or other basis specified by the Secretary) of 

25 health care providers (other than physicians) 


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1 under the public health insurance option under 

2 which payment shall only be available if the 

3 provider agrees to accept the payment rate es4 tablished under subsection (c) (without regard 

5 to cost-sharing) as the payment in full. 

6 ‘‘(4) EXCLUSION OF CERTAIN PROVIDERS.— 

7 The Secretary shall exclude from participation under 

8 the public health insurance option a health care pro9 vider that is excluded from participation in a Fed10 eral health care program (as defined in section 

11 1128B(f) of the Social Security Act). 

12 ‘‘(f) APPLICATION OF FRAUD AND ABUSE PROVI13 SIONS.—Provisions of law (other than criminal law provi14 sions) identified by the Secretary by regulation, in con15 sultation with the Inspector General of the Department 

16 of Health and Human Services, that impose sanctions 

17 with respect to waste, fraud, and abuse under Medicare, 

18 such as the False Claims Act (31 U.S.C. 3729 et seq.), 

19 shall also apply to the public health insurance option. 

20 ‘‘(g) MEDICARE DEFINED.—For purposes of this sec21 tion, the term ‘Medicare’ means the health insurance pro22 grams under title XVIII of the Social Security Act.’’. 

23 (b) CONFORMING AMENDMENTS.— 

24 (1) TREATMENT AS QUALIFIED HEALTH

25 PLAN.—Section 1301(a)(2) of the Patient Protection 


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1 and Affordable Care Act, as amended by section 

2 10104(a) of such Act, is amended— 

3 (A) in the heading, by inserting ‘‘, THE

4 PUBLIC HEALTH INSURANCE OPTION,’’ before 

5 ‘‘AND’’; and 

6 (B) by inserting ‘‘the public health insur7 ance option under section 1325,’’ before ‘‘and a 

8 multi-State plan’’. 

9 (2) LEVEL PLAYING FIELD.—Section 1324(a) 

10 of such Act, as amended by section 10104(n) of such 

11 Act, is amended by inserting ‘‘the public health in12 surance option under section 1325,’’ before ‘‘or a 

13 multi-State qualified health plan’’. 

Æ 


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