HB 1863 — 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
 1   Establishing the Public Option Program and the Public Option
 2      Program Fund; and imposing duties on the Insurance
 3      Department.
 4                               TABLE OF CONTENTS
 5   Chapter 1.   Preliminary Provisions
 6   Section 101.    Short title.
 7   Section 102.    Definitions.
 8   Chapter 3.     Public Option Program
 9   Section 301.    Establishment of program.
10   Section 302.    Operation of program.
11   Section 303.    Contracts.
12   Section 304.    Qualified health insurance policies.
13   Section 305.    Enrollment.
14   Section 306.    Eligibility.
15   Section 307.    Coverage requirements.
16   Section 308.    Reimbursement rates.
17   Section 309.    Premiums.
18   Chapter 5.   Public Option Program Fund
 1   Section 501.    Establishment of fund.
 2   Section 502.    Administration and purposes.
 3   Section 503.    Appropriation on continuing basis.
 4   Section 504.    Fund sources.
 5   Section 505.    Money to remain in fund.
 6   Chapter 7.   Miscellaneous Provisions
 7   Section 701.    Reports.
 8   Section 702.    Effective date.
 9      The General Assembly of the Commonwealth of Pennsylvania
10   hereby enacts as follows:
11                                    CHAPTER 1
12                           PRELIMINARY PROVISIONS
13   Section 101.    Short title.
14      This act shall be known and may be cited as the Public Option
15   Program Act.
16   Section 102.    Definitions.
17      The following words and phrases when used in this act shall
18   have the meanings given to them in this section unless the
19   context clearly indicates otherwise:
20      "Covered person."       A policyholder, subscriber or other
21   individual who is entitled to receive health care services under
22   a health insurance policy.
23      "Department."    The Insurance Department of the Commonwealth.
24      "Facility."    A health care setting or institution providing
25   health care services, including:
26          (1)     A general, special, psychiatric or rehabilitation
27      hospital.
28          (2)     An ambulatory surgical facility.
29          (3)     A cancer treatment center.
30          (4)     A birth center.

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 1          (5)     A skilled nursing center.
 2          (6)     An inpatient, outpatient or residential drug and
 3      alcohol treatment facility.
 4          (7)     A facility licensed by the Office of Mental Health
 5      and Substance Abuse Services of the Department of Human
 6      Services.
 7          (8)     A laboratory, imaging, diagnostic or other
 8      outpatient medical service or testing facility.
 9          (9)     A health care provider office or clinic.
10      "Fund."     The Public Option Program Fund established under
11   section 501.
12      "Health care practitioner."     As follows:
13          (1)     A licensed hospital or health care facility, medical
14      equipment supplier or person who is licensed, certified or
15      otherwise regulated to provide health care services under the
16      laws of this Commonwealth, including a physician, podiatrist,
17      optometrist, psychologist, physical therapist, certified
18      nurse practitioner, registered nurse, nurse midwife,
19      physician's assistant, chiropractor, dentist, pharmacist or
20      an individual accredited or certified to provide behavioral
21      health services.
22          (2)     The term includes an individual providing emergency
23      services under a licensed emergency medical services agency
24      as defined in 35 Pa.C.S. § 8103 (relating to definitions).
25      "Health care service."     Any covered treatment, admission,
26   procedure, medical supplies and equipment or other services,
27   including behavioral health, prescribed or otherwise provided or
28   proposed to be provided by a health care provider to a covered
29   person for the diagnosis, prevention, treatment, cure or relief
30   of a health condition, illness, injury or disease under the

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 1   terms of a health insurance policy.
 2      "Health insurance policy."       As follows:
 3            (1)   A policy, subscriber contract, certificate or plan
 4      issued by an insurer that provides medical or health care
 5      coverage.
 6            (2)   The term does not include any of the following:
 7                  (i)    An accident only policy.
 8                  (ii)    A credit only policy.
 9                  (iii)    A long-term care or disability income policy.
10                  (iv)    A specified disease policy.
11                  (v)    A Medicare supplement policy.
12                  (vi)    A TRICARE policy, including a Civilian Health
13            and Medical Program of the Uniformed Services (CHAMPUS)
14            supplement policy.
15                  (vii)    A fixed indemnity policy.
16                  (viii)    A hospital indemnity policy.
17                  (ix)    A dental only policy.
18                  (x)    A vision only policy.
19                  (xi)    A workers' compensation policy.
20                  (xii)    An automobile medical payment policy under 75
21            Pa.C.S. (relating to vehicles).
22                  (xiii)    A homeowner's insurance policy.
23                  (xiv)    Any other similar policies providing for
24            limited benefits.
25      "Individual market."       The market for health insurance
26   coverage offered to individuals other than in connection with a
27   group.
28      "Insurer."        An entity licensed by the department that offers,
29   issues or renews an individual or group health insurance policy
30   that is offered or governed under any of the following:

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 1          (1)     The act of May 17, 1921 (P.L.682, No.284), known as
 2      The Insurance Company Law of 1921, including section 630 and
 3      Article XXIV of that act.
 4          (2)     The act of December 29, 1972 (P.L.1701, No.364),
 5      known as the Health Maintenance Organization Act.
 6          (3)     40 Pa.C.S. Ch. 61 (relating to hospital plan
 7      corporations) or 63 (relating to professional health services
 8      plan corporations).
 9      "Large group market."     The market for health insurance
10   coverage offered through a group health insurance policy for a
11   group of 51 or more employees, exclusive of dependents.
12      "Program."     The Public Option Program established under
13   section 301.
14      "Qualified health plan."     As defined in 42 U.S.C. § 18021(a)
15   (1) (relating to qualified health plan defined).
16      "Reference premium."     For health insurance offered on the
17   individual market, the second-lowest cost silver plan for a
18   given zip code, as determined in accordance with 26 CFR 1.36B-
19   3(f) (relating to computing the premium assistance credit
20   amount).
21      "Small group market."     The market for health insurance
22   coverage offered through a group health insurance policy for a
23   group of at least 1 employee and up to 50 employees, exclusive
24   of dependents.
25                                 CHAPTER 3
26                           PUBLIC OPTION PROGRAM
27   Section 301.    Establishment of program.
28      The Public Option Program is established within the
29   department.
30   Section 302.     Operation of program.

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 1      The department shall operate the program for the purposes of
 2   developing and offering health insurance coverage in the
 3   individual market on the exchange established under 40 Pa.C.S.
 4   Ch. 93 (relating to State-based exchange). The department shall
 5   develop and offer health insurance coverage in the small group
 6   market and may develop and offer health insurance coverage in
 7   the large group market in a manner determined by the department.
 8   Section 303.    Contracts.
 9      The department may make, execute and deliver contracts or
10   other arrangements, including interagency agreements with
11   Commonwealth agencies, to perform activities necessary or
12   appropriate to further the purposes of this act.
13   Section 304.    Qualified health insurance policies.
14      (a)     Restrictions.--The department may limit the availability
15   of individual market health insurance policies offered through
16   the program by restricting the availability of the policies on
17   the exchange established under 40 Pa.C.S. Ch. 93 (relating to
18   State-based exchange).
19      (b)     Compliance.--If individual market health insurance
20   policies are available for purchase on the exchange established
21   under 40 Pa.C.S. Ch. 93, the health insurance policies shall
22   comply with all Federal and State law applicable to qualified
23   health plans.
24   Section 305.    Enrollment.
25      (a)     Health care practitioners.--A health care practitioner
26   may enroll as a participating health care practitioner with the
27   program.
28      (b)     Facilities.--A facility may enroll as a participating
29   facility with the program.
30   Section 306.    Eligibility.

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 1      (a)   Individual market health insurance policies.--
 2            (1)   For individual market health insurance policies
 3      offered through the program, which are available on the
 4      exchange established under 40 Pa.C.S. Ch. 93 (relating to
 5      State-based exchange), an individual may only enroll in the
 6      health insurance policy if the individual satisfies the
 7      eligibility criteria specified in 45 CFR 155.305 (relating to
 8      eligibility standards).
 9            (2)   The department may establish eligibility criteria
10      for individual market health insurance policies offered
11      through the program which are not available for purchase
12      through the exchange established under 40 Pa.C.S. Ch. 93.
13      (b)   Small group market and large group market health
14   insurance policies.--The department may establish eligibility
15   criteria for groups to purchase small group market or large
16   group market health insurance policies through the program.
17   Section 307.     Coverage requirements.
18      (a)   Components.--Health insurance policies offered through
19   the program shall provide coverage for all of the following:
20            (1)   Essential health benefits inclusive of:
21                  (i)    Ambulatory patient services.
22                  (ii)     Emergency services.
23                  (iii)    Hospitalization.
24                  (iv)    Maternity and newborn care.
25                  (v)    Mental health and substance use disorder
26            services, including behavioral health treatment.
27                  (vi)    Prescription drugs.
28                  (vii)    Rehabilitative and habilitative services and
29            devices.
30                  (viii)    Laboratory services.

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 1                  (ix)    Preventive and wellness services and chronic
 2            disease management.
 3                  (x)    Pediatric services, including oral and vision
 4            care.
 5            (2)   Dependents up to 26 years of age.
 6            (3)   Dental benefits.
 7            (4)   Vision benefits.
 8            (5)   Spousal or domestic partner coverage.
 9      (b)   Different levels of coverage.--Health insurance policies
10   offered by the program shall provide different levels of
11   coverage in accordance with 42 U.S.C. § 18022(d) (relating to
12   essential health benefits requirements).
13      (c)   Compliance.--Except as provided in subsections (a) and
14   (b), health insurance policies offered through the program must
15   comply with all relevant Federal or State law governing health
16   insurance policies issued in the individual market, small group
17   market or large group market, as applicable.
18   Section 308.     Reimbursement rates.
19      The total amount that an individual or small group or large
20   group health insurance policy reimburses providers and
21   facilities for all covered benefits under the health insurance
22   policy may not exceed 160% of the total amount Medicare would
23   reimburse providers and facilities for the same or similar
24   services in the Statewide aggregate.
25   Section 309.     Premiums.
26      The premiums for individual market health insurance policies
27   offered in a zip code or small group and large group health
28   insurance policies offered in a geographic region through the
29   program shall be at least:
30            (1)   Five percent lower than the reference premium for

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 1      the zip code or geographic region for the first year of
 2      implementation.
 3          (2)     Ten percent lower than the reference premium for the
 4      zip code or geographic region for the second year of
 5      implementation.
 6          (3)     Twelve and five-tenths percent lower than the
 7      reference premium for the zip code or geographic region for
 8      the third year of implementation.
 9          (4)     Fifteen percent lower than the reference premium for
10      the zip code or geographic region for the fourth year of
11      implementation and in any subsequent years of the program's
12      operation.
13                                   CHAPTER 5
14                         PUBLIC OPTION PROGRAM FUND
15   Section 501.    Establishment of fund.
16      The Public Option Program Fund is established in the State
17   Treasury.
18   Section 502.    Administration and purposes.
19      The department shall administer the fund to implement and
20   administer the program and provide for the payment of expenses
21   associated with staffing requirements.
22   Section 503.    Appropriation on continuing basis.
23      Money in the fund and the interest accruing on the money in
24   the fund are appropriated on a continuing basis to the
25   department for the purposes described in section 502.
26   Section 504.    Fund sources.
27      The department may solicit and accept money for the purposes
28   described in section 502, including money appropriated by the
29   General Assembly, grants, donations, gifts and other payments
30   from any source, which shall be deposited into the fund.

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 1   Section 505.    Money to remain in fund.
 2      Any money remaining in the fund at the end of each fiscal
 3   year, including interest accruing on the money in the fund,
 4   shall not revert to the General Fund but shall remain in the
 5   fund.
 6                                 CHAPTER 7
 7                          MISCELLANEOUS PROVISIONS
 8   Section 701.    Reports.
 9      (a)   Annual report required.--No later than the first
10   September 1 that is at least 365 days after the effective date
11   of this subsection and each September 1 thereafter, the
12   department shall compile an annual report detailing the
13   effectiveness of the program.
14      (b)   Contents.--Each annual report under this section must
15   include the following:
16            (1)   The number of individuals enrolled who received
17      health insurance coverage under the program.
18            (2)   Demographic information about the individuals
19      receiving health insurance coverage under the program.
20            (3)   Program premiums.
21            (4)   Funding used to operate the program.
22            (5)   The money remaining in the fund.
23      (c)   Distribution.--Each annual report under this section
24   shall be distributed to:
25            (1)   The President pro tempore of the Senate.
26            (2)   The Speaker of the House of Representatives.
27            (3)   The Majority Leader and the Minority Leader of the
28      Senate.
29            (4)   The Majority Leader and the Minority Leader of the
30      House of Representatives.

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 1            (5)   The chairperson and minority chairperson of the
 2      Banking and Insurance Committee of the Senate.
 3            (6)   The chairperson and minority chairperson of the
 4      Insurance Committee of the House of Representatives.
 5            (7)   The chairperson and minority chairperson of the
 6      Health and Human Services Committee of the Senate.
 7            (8)   The chairperson and minority chairperson of the
 8      Health Committee of the House of Representatives.
 9            (9)   The chairperson and minority chairperson of the
10      Human Services Committee of the House of Representatives.
11      (d)   Posting.--Each annual report under this section shall be
12   posted on the publicly accessible Internet website of the
13   department.
14   Section 702.    Effective date.
15      This act shall take effect as follows:
16            (1)   Chapter 3 shall take effect in 365 days.
17            (2)   The remainder of this act shall take effect
18      immediately.




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