An Act Relating to Options for Health Insurance Coverage
Maine Legislature, Session 121, LD 1174
Committee: Insurance and Financial Services
Sponsors: O'NEIL

Legislative Document 
No. 1174 
H.P.871 
House of Representatives, March 5, 2003 
An Act Relating to Options for Health Insurance Coverage 
(EMERGENCY) 
Reference to the Committee on Insurance and Financial Services suggested and ordered 
printed. 
Presented by Representative O'NEIL of Saco. 
Printed on recycled paper 
17l~ 
1?7.7JJdC~ 
MILLICENT M. MacFARLAND 
Clerk 
Emergency preamble. Whereas~ Acts of the Legislature do not 
become effective until 90 days after adjournment unless enacted 
as emergencies; and 
Whereas~ the State seeks to protect all its residents from 
significant financial hardship due to major illness or accident: 
and 
Whereas. the State' s current health 
crisis 
and 
premiums 
are 
unaffordable 
residents; and 
insurance market 
for 
too 
many 
is in 
state 
Whereas. this legislation intends to pool the insurance risk 
for catastrophic medical services across a broad population; and 
Whereas, this legislation seeks to promote the development 
of affordable, noncatastrophic health insurance options for small 
and large employers as well as individuals; and 
Whereas, 
this 
legislation 
aims 
to 
reduce 
created by charity and bad debt and direct these 
reducing health insurance premium expenses; and 
Whereas, this legislation recognizes that 
quality-oriented management of medical services 
ensure program sustainability; and 
cost 
shifting 
savings toward 
appropriate and 
is necessary to 
Whereas. in the judgment of the Legislature, these facts 
create an emergency within the meaning of the Constitution of 
Maine 
and 
require 
the 
following 
legislation 
as 
immediately 
necessary for the preservation of the public peace, health and 
safety; now, therefore, 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 24·A MRSA c. 54 is enacted to read: 
CHAPTER 54 
MAIRE CATASTROPHIC HEALTH PROTECTION PLAN 
§3901. Short title 
This 
chapter 
may 
be 
known 
and 
cited 
as 
"the 
Maine 
Catastrophic Health Protection Plan." 
§3902. 
Maine Catastrophic Health Protection Plan 
The Maine Catastrophic Health Protection Plan, referred to 
in this 
chapter 
as 
"the 
plan," 
is 
established 
to 
provide 
catastrophic 
health 
insurance 
protection 
to 
eligible 
state 
residents. 
The 
plan 
shall 
operate 
in 
accordance 
with 
the 
requirements of this section. 
1. Organization. The plan is established as an independent. 
nonprofit insurance company and is authorized to conduct all 
activities described in this chapter, either directly or through 
subcontractual arrangements with other appropriate entities. 
The 
plan is also authorized to identify and purchase reinsurance 
coverage. 
2. 
Board of directors. 
The plan is governed by a board of 
directors, referred to in this chapter as "the board." 
A. 
The board consists of 9 members appointed as follows: 
(1) 
Three members appointed by the Governor; 
( 2} 
Three members appointed by the Pre§ident of the 
Senate; and 
( 3 } 
Three members 
appointed by the Spegker of 
th!;1 
House of Representatives. 
For each set of initially selected directors, one-year, 2-year 
and 3-year terms of office must be randomly assigned. 
Aft!;1r the 
initial terms are completed, directors are appointed for 3-year 
terms. 
An individual may not serve more than 3 consecutive terms. 
3. 
Executive director. 
The board shall hire an executive 
director to 
administer 
and oversee 
the plan. 
The 
executive 
director serves at the direction of the board. 
~. 
Eligibility. 
All eligible state resid!;1nts, except those 
covered by Medicare or MaineCare, must be annually enrolled in 
the plan as of July 1st. 
To be eligible, a person must have 
establi§hed legal residence in this State for the entir!;1 calendar 
year preceding the date of the person's enrollment. 
Eligible 
resident§ filing persongl tax returns as a single per§on with no 
dependents must be considered single sub§cribers in the plan; 
those residents filing all other personal tgx returns must be 
considered family subscribers in the plan. 
S. 
Benefit coverage. 
The plan cover§ medicgl 
expen§!;1s, 
g!;1nerally defined to be those hospital, profe§§iongl, diggnostic, 
th!;1rapeutic, pharmacy and similar servic!;1s gssocigted with acute 
medical 
care, 
after 
§atisfaction 
of 
an 
gnnual 
deductible 
e§tgbli§hed in subsection 6. 
6. 
Annual deductible. 
The costs of services, which must be 
calculated based 
on 
a 
rate consistent with current, 
average 
reimbursement levels in this State, associated with the def ined 
benefit coverage must be recorded toward the annual deductible 
amount. 
A minimum and maximum calendar year deductible amount 
for the first year of operation must be established by the plan 
for single subscribers and family subscribers. 
Between theSe 
limi ts, the plan shall establish an administratively manageable 
set of tiers that represent, on average, 30% of the individual's 
or family's adjusted gross income as reported to the Treasurer of 
State for the calendar year immediately preceding the date of th~ 
enrollee's 
eligibility. 
Subsequent 
to 
the 
first 
year 
of 
operation, 
these 
minimum 
and 
maximum 
deductible 
amounts 
must 
increase at a rate equal to the Consumer Price Index in the State 
for 
the 
previous 
calendar 
year. 
The 
accrual 
of 
deductible 
amounts restarts each January 1st. 
These deductible amounts can 
not be changed without the approval of the Governor. 
7. 
Lifetime maximum. 
The board shall establish a single 
subscriber 
and 
family 
subscriber lifetime maximum, 
an 
amount 
above which the enrollee is no longer required to satisfy an 
annual deductible prior to receiving coverage. 
8. 
Conwnunity rating. 
Notwithstanding the requirements of 
sections 
2736-C 
and 
2808-B 
relating to 
community 
rating for 
individual 
and 
small 
group 
health plans, 
a 
prospective 
and 
actuarially 
determined 
community 
rate 
must 
be 
calculated 
annually. 
A single subscriber premium and a family subscriber 
premium that are actuarially based on this community rate must be 
established by the board. 
9. 
Premium payments. 
All eligible residents are required 
to 
participate 
in 
the 
plan. 
Single 
subscriber 
or 
family 
subscriber premium payments may be voluntarily paid on behalf of 
an enrollee by an employer. 
This subsection does not require any 
self-insured employer plan to participate; in premium payments. 
Compliance 
by 
a 
self-insured 
employer 
plan 
is 
entirely 
voluntary. 
In the event that there is no employer contribution 
for an enrollee, single subscriber or family subscriber premiums 
must be collected directly from the enrollee by the State. 
10. 
Claims payments. 
Upon satisfaction of the deductibl D 
the plan shall 
reimburse 
at 
a 
rate consistent with current 
average reimbursement levels in the State. 
If a health plan or 
self-insured employer 
has 
incurred, 
for 
an enrollee, 
medical 
costs eligible for 
reimbursement that 
are 
in excess 
of 
the 
deductible, 
the 
plan 
shall 
reimburse 
the 
health 
plan 
or 
self-insured employer, and this payment must be considered full 
and complete. 
Adjustments to this payment amount must be made to 
reflect the expected efficiency and effectiveness of the health 
plan or self-insured employer to manage services provided before 
and after the deductible amount is reached. 
For 
an enrollee 
without other health insurance coverage who has incurred medical 
costs eligible for 
reimbursement 
that 
are in excess 
of 
the 
deductible, the plan shall reimburse providers directly for any 
amount in excess of the deductible, provided that the reimbursed 
amount represents full and complete payment for the service. 
In 
the al ternati ve, the plan shall reimburse the enrollee, who is 
responsible for paying the provider. 
11. 
Medical 
management. 
The 
board shall establish 
and 
administer 
appropriate 
medical 
and 
utilization 
management 
programs that ensure the delivery of cost-effective, high-guality 
services. 
These programs include, but are not limited to, the 
identif ication of clinical centers of excellence. 
Health plans 
and self insured employers shall advise the plan of persons with 
medical conditions that are likely to reach deductible levels and 
shall cooperate with the medical management protocols established 
under this subsection. 
12. 
Coordination 
w.i,~th bureau. 
The board shall coordinate 
with the bureau to develop an operation plan to implement this 
chapter. 
13. 
Planning 
activities. 
The 
board 
shall 
prepare 
a 
comprehensive 
plan 
for 
implementation 
of 
this 
chapter. 
Organizational, operational and financing arrangements include, 
but 
are 
not 
limited 
to: 
specifying 
eligibility 
criteria L 
establishing benefit coverage 
levels, 
establishing single 
and 
famil:x" 
deductible 
amounts, 
tiers 
and 
lifetime 
maximums, 
establishing levels and procedures related to a lifetime maximum, 
calculating 
community rated 
premium 
levels, 
establishing 
a 
reasonable 
cost 
structure 
consistent 
with 
current, 
average 
reimbursement levels, describing premium collection and claims 
processing 
arrangements, 
identifying 
and 
complying 
with 
or 
modifying insurance reguirements, ensuring that reduced bad debt 
and charity expenses 
are 
recognized 
and establishing medical 
management 
and 
payment 
adjustment programs. 
The 
board shall 
submit its comprehensive plan to the Governor and the Legislatu~~ 
by December 31, 2004. 
14. 
Availability 
of 
coverage. 
The 
plan 
shall 
begin 
offering coverage on July 1, 2005. 
Sec. 
2. 
Appropriations 
and 
allocations. 
The 
following 
appropriations and allocations are made. 
Maine Catastrophic Health Protection Plan 
Initiative: 
Provides funds for the administration of the Maine 
Catastrophic Health Protection Plan. 
General Fund 
2003-04 
All Other 
$400,000 
General Fund Total 
$400,000 
Emergency clause. 
In view of the emergency cited in the 
preamble, this Act takes effect when approved. 
SUMMARY 
This 
bill 
establishes 
the 
Maine 
Catastrophic 
Health 
Protection Plan as 
a 
nonprofit insurance 
company. 
The 
plan 
provides 
catastrophic health insurance 
coverage 
to all state 
residents. 
The 
plan 
is 
governed 
by 
a 
9-member 
board 
of 
directors. 
The bill 
requires 
that 
the 
plan 
begin offering 
coverage on July 1, 2005. 
The bill also appropriates $400,000 
for planning activities and requires the board of directors to 
submit a comprehensive plan to the Governor and the Legislature 
by December 31, 2004.