SEC. 2. PUBLIC OPTION FOR HEALTH INSURANCE COV-
ERAGE. 
(a) IN GENERAL.—Part 2 of subtitle D of title I of 
the Patient Protection and Affordable Care Act (Public 
Law 111–148) is amended by adding at the end the fol-
lowing new section: 
‘‘SEC. 1314. PUBLIC OPTION FOR HEALTH INSURANCE COV-
ERAGE. 
‘‘(a) IN GENERAL.—If the Secretary determines that 
individuals residing in a rating area (as described in sec-
tion 2701(a) of the Public Health Service Act (42 U.S.C. 
300gg(a))) eligible to purchase individual health insurance 
coverage through an Exchange will not have access to a 
qualified health plan offered through an Exchange in the 
individual market with respect to a plan year beginning 
on or after January 1, 2018, the Secretary shall make 
available the public option for health insurance coverage 
described in subsection (b) (in this section referred to as 
the ‘public option’) to such individuals through such Ex-
change for such plan year. 
‘‘(b) PUBLIC OPTION REQUIREMENTS.—The public 
option described in subsection (a) shall— 
‘‘(1) provide the essential health benefits pack-
age (as defined in section 1302(a)); 
‘‘(2) comply with the requirements of this title 
and the amendments made by this title, to the ex-
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tent practicable, applicable to a health plan offered 
through an Exchange; and 
‘‘(3) consist of a plan in the silver level of cov-
erage (as described in section 1302(d)). 
‘‘(c) ENROLLMENT AND COVERAGE PERIODS.—The 
Secretary shall establish enrollment and coverage periods 
for individuals who enroll in the public option. Such peri-
ods shall be established, to the extent practicable, in co-
ordination with the enrollment and coverage periods for 
other plans offered through an Exchange. 
‘‘(d) PREMIUMS.— 
‘‘(1) MONTHLY PREMIUM.—The Secretary shall 
determine a monthly premium for individuals en-
rolled in the public option. Such monthly premium 
shall be equal to 1⁄12 of the annual premium com-
puted under paragraph (2)(B). 
‘‘(2) ANNUAL PREMIUM.— 
‘‘(A) ESTIMATION.—The Secretary shall 
estimate the average, annual per capita amount 
for benefits and administrative expenses pay-
able under this section for individuals in each 
age band specified in subparagraph (C) enrolled 
in the public option. 
‘‘(B) COMPUTATION.—The annual pre-
mium under this subsection for months in a 
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year is equal to the average, annual per capita 
amount estimated under paragraph (1) for the 
year for each age band specified in subpara-
graph (C), geographically adjusted by rating 
area. 
‘‘(C) AGE BANDS.—The age bands speci-
fied in this subparagraph are the age bands de-
fined by the Secretary pursuant to section 
2701(a)(3) of the Public Health Service Act (42 
U.S.C. 300gg(a)(3)). 
‘‘(3) VARIATION IN PREMIUM RATES.—The pre-
mium rate charged for the public option may not 
vary except as provided under section 2701 of such 
Act (42 U.S.C. 300gg). 
‘‘(e) PAYMENT OF PREMIUMS.— 
‘‘(1) IN GENERAL.—Premiums for enrollment 
in the public option shall be paid to the Secretary 
at such times, and in such manner, as the Secretary 
determines appropriate. 
‘‘(2) DEPOSIT.—Amounts collected by the Sec-
retary under this section shall be deposited in the 
account established under subsection (f). 
‘‘(f) ACCOUNT.— 
‘‘(1) ESTABLISHMENT.—There is established in 
the Treasury of the United States an account for 
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the receipts and disbursements attributable to the 
operation of the public option. 
‘‘(2) PROHIBITION OF STATE IMPOSITION OF 
TAXES.—Section 1854(g) of the Social Security Act 
(42 U.S.C. 1395w–24(g)) shall apply to receipts and 
disbursements described in paragraph (1) in the 
same manner as such section applies to payments or 
premiums described in such section. 
‘‘(g) HEALTH CARE PROVIDER PAYMENT RATES FOR 
ITEMS AND SERVICES.— 
‘‘(1) IN GENERAL.— 
‘‘(A) RATES
NEGOTIATED
BY
THE
SEC-
RETARY.—Subject to subparagraph (B), the 
Secretary shall, through a negotiated agreement 
with health care providers, establish rates for 
reimbursing health care providers for providing 
the benefits covered by the public option. 
‘‘(B) 
MEDICARE
REIMBURSEMENT 
RATES.—If the Secretary and health care pro-
viders are unable to reach a negotiated agree-
ment on a reimbursement rate, the Secretary 
shall reimburse providers at rates determined 
for equivalent items and services under the 
original Medicare fee-for-service program under 
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parts A and B of title XVIII of the Social Secu-
rity Act. 
‘‘(C) FOR NEW SERVICES.—The Secretary 
shall modify reimbursement rates described in 
subparagraph (B) in order to accommodate 
payments for services that are not otherwise 
covered under the original medicare fee-for- 
service program. 
‘‘(2) PRESCRIPTION DRUGS.—Any payment rate 
under this subsection for a prescription drug shall be 
at a rate negotiated by the Secretary. If the Sec-
retary is unable to reach a negotiated agreement on 
such a reimbursement rate, the Secretary shall use 
rates determined for equivalent drugs paid for under 
the original medicare fee-for-service program. The 
Secretary shall modify such rates in order to accom-
modate payments for drugs that are not otherwise 
covered under the original medicare fee-for-service 
program. 
‘‘(h) HEALTH CARE PROVIDER PARTICIPATION.— 
‘‘(1) PROVIDER PARTICIPATION.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
establish conditions of participation for health 
care providers under the public option. 
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‘‘(B) LICENSURE
OR
CERTIFICATION.— 
The Secretary shall not allow a health care pro-
vider to participate in the public option unless 
such provider is appropriately licensed or cer-
tified under State law. 
‘‘(2) ESTABLISHMENT
OF
A
PROVIDER
NET-
WORK.— 
‘‘(A) MEDICARE AND MEDICAID PARTICI-
PATING
PROVIDERS.—A health care provider 
that is a participating provider of services or 
supplier under the Medicare program under 
title XVIII of the Social Security Act or under 
a State Medicaid plan under title XIX of such 
Act is a participating provider in the public op-
tion unless the health care provider opts out of 
participating in the public option through a 
process established by the Secretary. 
‘‘(B) ADDITIONAL PROVIDERS.—The Sec-
retary shall establish a process to allow health 
care providers not described in subparagraph 
(A) to become participating providers in the 
public option. 
‘‘(i) ADMINISTRATIVE CONTRACTING.— 
‘‘(1) AUTHORITIES.—The Secretary may enter 
into contracts for the purpose of performing admin-
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istrative functions (including functions described in 
subsection (a)(4) of section 1874A of the Social Se-
curity Act) with respect to the public option in the 
same manner as the Secretary may enter into con-
tracts under subsection (a)(1) of such section. The 
Secretary shall have the same authority with respect 
to the public option as the Secretary has under such 
subsection (a)(1) and subsection (b) of section 
1874A of the Social Security Act with respect to 
title XVIII of such Act. 
‘‘(2) TRANSFER
OF
INSURANCE
RISK.—Any 
contract under this paragraph shall not involve the 
transfer of insurance risk from the Secretary to the 
entity entering into such contract with the Sec-
retary.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) TREATMENT
AS
A
QUALIFIED
HEALTH 
PLAN.—Section 1301(a)(2) of the Patient Protection 
and Affordable Care Act (42 U.S.C. 18021(a)(2)) is 
amended— 
(A) in the paragraph heading, by inserting 
‘‘, THE PUBLIC HEALTH INSURANCE OPTION,’’ 
before ‘‘AND’’; and 
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(B) by inserting ‘‘the public health insur-
ance option under section 1314,’’ before ‘‘and a 
multi-State plan’’. 
(2) STATE INSURANCE REGULATION.—Section 
1324(a) of the Patient Protection and Affordable 
Care Act (42 U.S.C. 18044(a)) is amended by in-
serting ‘‘the public health insurance option under 
section 2795 of the Public Health Service Act,’’ be-
fore ‘‘or a multi-State qualified health plan’’. 
Æ 
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