An Act To Improve the AtTordability of Individual and Small Group Health Insurance
Maine Legislature, Session 121, LD 1175
Committee: Insurance and Financial Services
Sponsors: O'NEIL
Amends: 24-A MRSA §2413, 24-A MRSA §2736-C, 24-A MRSA §2808-B, 24-A MRSA §4202-A

Legislative Document 
No.1l7S 
H.P.872 
House of Representatives, March 5, 2003 
An Act To Improve the AtTordability of Individual and Small Group 
Health Insurance 
Reference to the Committee on Insurance and Financial Services suggested and ordered 
printed. 
Presented by Representative O'NEIL of Saco. 
Primed on recycled paper 
1J1~ 
/h.1Jld£~ 
MILLICENT M. MacFARLAND 
Clerk 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 24-A MRSA §2413. sub-§1.~. as amended by PL 199L c. 
211, §2, is further amended to read: 
F. 
As 
to Medicare 
supplement policies or contracts, 
as 
defined in chapter 67, if the policy cannot be anticipated, 
as estimated for the entire period for which rates are to be 
computed to provide 
coverage, 
on 
the basis 
of 
incurred 
claims experience and earned premiums for that period and in 
accordance with accepted actuarial principles and practices, 
to return to policyholders in the form of aggregate benefits 
provided under the policy at least 99% 85 g" of the aggregate 
amount 
of 
premiums 
collected in the 
case 
of 
individual 
policies and at least +9% 85g" 
of the aggregate amount of 
premiums collected in the case of group policies; or 
Sec. 2. 24-A MRSA §2736-C. sub-§2. 1fD. as amended by PL 200L 
c. 410, Pt. A, §2 and affected by §10, is further amended to read: 
D. 
A carrier 
may 
vary 
the 
premium 
rate 
due 
to 
age, 
occupation or industry and geographic area only under the 
following schedule and within the listed percentage bands. 
(1) 
For all policies, contracts or certificates that 
are executed, delivered, issued for delivery, continued 
or renewed in this State between December L 
1993 and 
July 14, 1994, the premium rate may not deviate above 
or below the community rate filed by the carrier by 
more than 50 g". 
(2) 
For all policies, contracts or certificates that 
are executed, delivered, issued for delivery, continued 
or renewed in this State between July 15, 1994 and July 
14, 1995, 
the premium rate may not deviate above or 
below the community rate filed by the carrier by more 
than 3 3°~o. 
(3) 
For all policies, contracts or certificates that 
are executed, delivered, issued for delivery, continued 
or renewed in this State aEl:eF from July 15, 1995 to 
October 15, 
2003, 
the premium rate may 
not deviate 
above or below the community rate filed by the carrier 
by more than 20~. 
(4) 
For all policies, contracts or certificates that 
are executed, delivered, issued for delivery, continued 
or renewed in this State on or after October 15, 2003, 
Page l-LR1542(1) 
the premium rate may not deviate above or below the 
community rate filed by the carrier. 
Sec. 3. 24-A MRSA §2736-C, sub-§2, ~E, 
as amended by PL 1999, 
c. 44, §l and affected by §2, is repealed. 
Sec. 4. 24-A MRSA §2736-C. sub-§5. as enacted by PL 1993, c. 
477, Pt. C, §l and affected by Pt. F, §l, is amended to read: 
S. 
Loss ratios. 
For all policies issued on 
effee~~¥e--~B&--~---~£~£---6ee~~eR 
October 
15, 
or after 
~.Re 
2003, 
the 
superintendent shall disapprove any premium rates filed by any 
carrier, whether initial or revised, 
for 
an individual health 
policy unless it is anticipated that the 
aggregate 
benefits 
estimated to be paid under all the individual health policies 
maintained in force by the carrier for the period for which 
coverage is to be provided will return to policyholders at least 
99% 85°", of the aggregate premiums collected for those policies, 
as determined in accordance with accepted actuarial principles 
and practices and on the basis of incurred claims experience and 
earned premiums. 
Sec. 5. 24-A MRSA §2736-C. sub-§9. ~C, as enacted by PL 1995, 
c. 570, §7, is amended to read: 
C. 
The 
group's 
anticipated loss 
ratio, 
as 
defined 
in 
subsection 5, is at least +9% 85%; 
Sec. 6. 24-A MRSA §2736-C. sub-§10 is enacted to read: 
10. 
Reinsurance mechanism. 
Carriers providing individual 
health insurance plans must participate in a reinsurance pool for 
the purpose of reinsuring individual risks. 
The participants in 
the pool shall guarantee, without limitation, the solvency of the 
pool. 
That 
guarantee 
constitutes 
a 
permanent 
financial 
obligation of each participant on a pro rata basis. 
Sec. 7. 24-A MRSA §2808-B, sub-§2. ~D. as amended by PL 200l, 
c. 410, Pt. A, §4 and affected by §10, is further amended to read: 
D. 
A carrier 
may 
vary 
the 
premium 
rate 
due 
to 
age, 
occupation or industry and geographic area only under the 
following schedule and within the listed percentage bands. 
(1) 
For all policies, contracts or certificates that 
are executed, delivered, issued for delivery, continued 
or renewed in this State between July 15, 1993 and July 
14, 
1994, the premium rate may not deviate above or 
c. 
below the community rate filed by the carrier by more 
than 50~b. 
(2) 
For all policies, contracts or certificates that 
are executed, delivered, issued for delivery, continued 
or renewed in this State between July 15, 1994 and July 
14, 1995, 
the premium rate may not deviate above or-
below the community rate filed by the carrier by more 
than 3 3~b. 
(3) 
For all policies, contracts or certificates that 
are executed, delivered, issued for delivery, continued 
or renewed in this State 
a~~eF from July 15, 1995 to 
October 15, 
2003, 
the premium rate may 
not deviate 
above or below the community rate filed by the carrier 
by more than 20%, except as provided in paragraph D-l. 
(4) 
For all pOlicies, contracts or certificates that 
are executed, delivered, issued for delivery, continued 
or renewed in this State on or after October 15, 2003, 
the premium rate may not deviate above or below the 
community rate filed by the carrier. 
Sec. S. 24-A MRS A §2S0S-B, sub-§2. ~D-l, as amended by PL 2001, 
410, Pt. A, §S and affected by §10, is further amended to read: 
D-1. 
With respect to eligible groups that employed, 
on 
average, 
to 
eligible 
employees 
in 
the 
preceding 
calendar year, a carrier may vary the premium rate due to 
age, occupation or industry and geographic area only under 
the 
following 
schedule 
and within the listed percentage 
bands. 
(1) 
For all policies, contracts or certificates that 
are executed, delivered, issued for delivery, continued 
or renewed in this State in 1998, the premium rate may 
not deviate above or below the community rate filed by 
the carrier by more than 40%. 
(2) 
For all policies, contracts or certificates that 
are executed, delivered, issued for delivery, continued 
or renewed in this State in 1999, the premium rate may 
not deviate above or below the community rate filed by 
the carrier by more than 30%. 
( 3 ) 
For all pOlicies, contracts or certificates that 
are executed, delivered, issued for delivery, continued 
or renewed in this State a~~eF from January 1, 2000 to 
OctQQer 
15, 
2Q03, 
the premium rate may 
not deviate 
above or below the community rate filed by the carrier 
by more than 20%. 
(4) 
For all policies, contracts or certificates that 
are executed, delivered, issued for delivery, continued 
or renewed in this State on or after October 15, 2003, 
the premium rate may not deviate above or below the 
community rate filed by the carrier. 
Sec. 9. 24-A MRSA §2808-B, sub-§6.,p:, as enacted by PL 1993, 
c. 477, Pt. B, §3 and affected by Pt. F, §l, is amended to read: 
I. 
Notwithstanding any other provision of this section, a 
carrier 
may--c~-wRetReF--i-t---wi±± shall offer to groups 
having 
only 
one 
member 
coverage 
1:HlaeF--_t.-ile---eaFFieF.!.6 
~Haivia~a±-~_t.~-Felieie&-~~~~--~-e~Re~--~~~~-iH 
tRi6-~~~-~£--aeeeFaaaee-~_t.~-6e€~ieR--~~~~_G-~--eeveFa~e 
under 
a 
small group health plan in accordance with this 
sectionT-~-~~r-a~~-~R€-~~~~~--aeeG-Het-~~~--~-~Fe~F6 
ef-eHe-aetR-6ma±±-~Fe~p-aHa-iHaivia~a±-Rea±tR-eeveFa~e. 
Sec. 10. 24-A MRSA §2808-B, sub-§8. as repealed by PL 2001, c. 
410, Pt. A, §7, is reenacted to read: 
8. 
Standardized plans. 
The superintendent shall by rule 
define 
standardized small group health plans that must 
be 
offered by all carriers offering small group health plans in the 
State. 
An association group organized pursuant to section 2805-A 
or a trustee group organized pursuant to section 2806 may offer 
one or both 
plans to its subgroups. 
The plans must consist of a 
standard plan 
and 
a 
basic plan. 
Both plans 
must 
meet 
the 
requirements for mandated coverage for specific health services, 
specific diseases and for certain providers of health services 
under Title 24 and this Title applicable to small group health 
plans. 
As used in this subsection: 
A. 
"Standard plan" means a plan that is similar to those 
plans typically sold to small employers; and 
B. 
"Basic plan" means a plan that emphasizes preventative 
care and that contains reasonable but lesser benefits than 
the standard plan to the extent necessary to reduce the 
anticipated cost of the 
The premium rate charged by a carrier for the basic plan may not 
exceed 80°" 
of the corresponding premium rate charged by that 
carrier for the standard plan. 
A health maintenance organization authorized pursuant to chapter 
may impose penalties in its 2 standardized small group health 
plans through its utilization review procedures that apply per 
admission or per encounter. 
Those penal ties must be consistent 
with the 
normal 
requirements 
applicable to benefits 
in that 
health maintenance organization. 
Sec. 11. 24-A MRS A §2808-B. sub-*9. as enacted by PL 1993, c. 
325, §l, is repealed and the following enacted in its place: 
9. 
Reinsurance 
mechanism. 
Small 
group 
carriers 
shall 
participate in a reinsurance pool for the purpose of reinsuring 
small group risks. 
The participants in the plan of operation of 
the pool shall guarantee, without limitation, the solvency of the 
pool. 
That 
guarantee 
constitutes 
a 
permanent 
financial 
obligation of each participant on a pro rata basis. 
Sec. 12. 24-A MRSA §2808-B. sub-§10 is enacted to read: 
10. 
Minimum return of aggregate premiums. 
For all policies 
issued on 
or after October 
lS, 
2003, 
the 
Superintendent of 
Insurance 
shall 
disapprove 
any 
premium 
rates 
filed 
by 
any 
carrier, whether initial or revised, for a 
small group health 
policy unless it is anticipated that the 
aggregate benefits 
estimated to be paid under all the health insurance policies 
maintained in force 
by the carrier for 
the period for which 
coverage is to be provided will return to policyholders at least 
85q,o of the aggregate premiums collected for those policies, as 
determined in accordance with accepted actuarial principles and 
practices and on the basis of incurred claims experience and 
earned premiums. 
Sec. 13. 24-A MRSA §4202-A. sub-§!. as amended by PL 2001, c. 
218, §l, is further amended to read: 
1. 
Basic 
health 
care 
services. 
"Basic 
health 
care 
services" means health care services that an enrolled population 
might reasonably require in order to be maintained in good health 
and includes, at a minimum, 
emergency care, inpatient hospital 
care, 
inpatient 
physician 
services, 
outpatient 
physician 
services, 
ancillary 
services 
such 
as 
x-ray 
services 
and 
laboratory services and all benefits mandated by statute and 
mandated by rule applicable to health maintenance organizations. 
The superintendent may adopt rules defining "basic health care 
services" to be provided by health maintenance organizations. 
±a 
aaeF~~a~--6~€a--~~~€£7--~~-~-int~--~~~--&~a&iG&F--~ae 
eeyeFa~es--~~--~--~Faai~ieaally--aeeR--~~~-~y--aea±~a 
ffiaiR~eRaRee--e~~aRi~a£ieR6+--~~€--~-~~---~~~~~~~~y--ia--~ae 
maF*e~F±aeer-~R~-~~-~~r~~-ef-~B¥J~JR~-~~~~l~~~~~&&-~e 
emF±eyeF&-aRa-€ea6~mer6T The superintendent ffiay-ae~ shall require 
that all health benefit plans 
offered by health maintenance 
organizations meet or exceed each of the particular requirements 
of 
standard 
or 
basic 
health 
plans 
specified 
in 
Bureau 
of 
Insurance 
Rule, 
Chapter 
750. 
±ae--6~pe~~R~eRaeR~--ffiay--6e±ee~ 
~e~~~~ea--6e~v~ee6--f~effi--affieR~--~ae6e--6e~--fe~~a--~R--~~~ea~--ef 
±R6~~aRee-~~J€~-~~~--~~-aRa-6aaJJ-~~~-~~~r-&~&-Re~ 
eHee66~ve---~F--~~~~~--~i~~~~~~~,---~~~~~~---4R---~ae 
eepaYffieR~T-~~&~F&&C~r-~~~~~-aRa--~&aeF-~~~~-~--6~ea 
eeve~a~eT-~~~--&aa&-~~~-~a&~F&&-~6~-~-er-~~-~ae6e 
~e~~~~ea-4R-~~~~~~-&y-6~a~~~eT Rules adopted pursuant 
to this subsection are major substantive rules as defined in 
Title 5, chapter 375, subchapter ±±-A 2-A. 
Sec. 14. 
Reinsurance mechanism 
plan~ individual health plans. 
That section of this Act that enacts the Maine Revised Statutes, 
Title 24-A, section 2736-C, subsection 10 does not take effect 
until 
the 
Superintendent 
of 
Insurance 
has 
approved 
a 
plan 
developed by the Governor's Office of Health Policy and Finance, 
created by Executive Order 6 FY 02/03, pursuant to rules adopted 
by the Department of Human Services, Bureau of Medical Services. 
The plan may permit spreading individual risks evenly over the 
entire 
health 
insurance 
market 
through 
a 
risk 
adjustment 
mechanism that assesses carriers with lower-than-average risks to 
fund 
the 
excess 
costs 
of 
carriers 
with 
higher-than-average 
risks. 
The 
plan 
may 
allow 
partial 
integration 
of 
these 
individual risks with a cap on the increment to group premiums. 
The plan may not establish a 
separate health insurance plan, 
allow carriers to avoid or reject high-risk policyholders, reduce 
the 
insured's 
benefits 
or 
increase 
cost-sharing. 
The 
superintendent may approve a plan only after the superintendent 
determines 
that 
the 
plan is 
In 
the 
public 
interest 
and 
IS 
consistent with this section and Title 24-A, 
section 2736-C. 
Rules 
adopted pursuant to this section are major, 
substantive 
rules as defined in Title 5, chapter 375, subchapter 2-A. 
Sec. 15. Reinsurance mechanism plan. small group health plans. 
That section of this Act that repeals and replaces the Maine 
Revised Statutes, Title 24-A, section 2808-B, sub-section 9 does 
not 
take 
effect 
until 
the 
Superintendent 
of 
Insurance 
has 
approved a 
plan 
developed by the Governor's Office of Health 
Policy and 
Finance, 
created by 
Executive 
Order 
FY 
02/03, 
pursuant to rules adopted by the Department of Human Services, 
Bureau of Medical Services. 
The plan may permit spreading the 
risks evenly over the entire health insurance market through a 
risk 
adjustment 
mechanism 
that 
assesses 
carriers 
with 
lower-than-average risks to 
fund the excess costs of carriers 
with 
higher-than-average 
risks. 
The 
plan 
may 
allow partial 
integration of 
these 
small 
group 
risks 
with 
a 
cap 
on 
the 
increment 
to 
group 
premiums. 
The 
plan 
may 
not establish 
a 
separate 
health 
insurance 
plan, 
allow 
carriers 
to 
avoid or reject high-risk policyholders, 
reduce the insured's 
benefits 
or 
increase 
cost-sharing. 
The 
superintendent 
may 
approve a plan only after the superintendent determines that the 
plan is in the public interest and is consistent with this 
section and Title 24-A, section 2808-B. 
Rules adopted pursuant 
Ii 
to this section are major, substantive rules as defined in Title 
5, chapter 375, subchapter 2-A. 
Sec. 16. Effective date. 
That section of this Act that amends 
the 
Maine 
Revised 
Statutes, 
Title 
24-A, 
section 
2736-C, 
subsection 5 takes effect October 15, 2003. 
SUMMARY 
Current 
law 
allows 
small 
group 
carriers 
to 
form 
a 
reinsurance pool for the purpose of reinsuring small group risks. 
To date, no small group carriers have not taken advantage of this 
authorization. 
This bill requires both individual and small group health 
plan carriers to participate in a 
reinsurance pool 
for their 
respective type of insurance. 
The Department of Human Services, 
Bureau of Medical Services and the Governor's Office of Health 
Policy and Finance, 
an office created by Executive Order 
on 
January 9, 2003, are required to work together to develop a plan 
creating the reinsurance pools. 
The requirement to participate 
in the reinsurance pools is contingent upon the approval of the 
plan by the Superintendent of Insurance. 
This bill also requires so-called "pure community rating" 
for 
both 
individual 
and 
small 
group 
health 
plan 
carriers, 
requires higher amounts of premium dollars to be used for direct 
medical 
care 
and 
removes 
statutory 
authority 
permitting 
high-deductible plans.