Public Option Deficit Reduction Act

This bill amends the Patient Protection and Affordable Care Act to require the Department of Health and Human Services (HHS) to offer a public health insurance option that ensures choice, competition, and stability of affordable, high-quality coverage throughout the United States. The bill declares that HHS's primary responsibility is to create a low-cost plan without compromising quality or access to care.

The bill sets forth provisions related to the establishment and governance of the public health insurance option, including that plans under the option must: (1) be offered only through health insurance exchanges; (2) comply with requirements for plans offered through exchanges, including requirements related to benefits, benefit levels, provider networks, notices, consumer protections, and cost sharing; and (3) include plans with bronze, silver, and gold tier benefits.

HHS must: (1) establish an office of the ombudsman for the public health insurance option; (2) collect data to establish premiums and payment rates; (3) establish geographically adjusted premiums at a level sufficient to fully finance the costs of the health benefits provided, administrative costs, and a contingency margin; and (4) establish payment rates for health care providers at Medicare rates, with higher rates for the first three years.

The bill appropriates funding for the establishment of the public health insurance option. HHS must repay this amount over 10 years.

HHS may use innovative payment mechanisms and policies to determine payments for items and services under the public health insurance option.