An Act To Control Premium Costs in the Small Group Health Insurance Market
Maine Legislature, Session 124, LD 0859
Sponsors: TREAT, BOWMAN
Amends: 24-A MRSA §2

MAINE STATE LEGISLATURE 
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124th MAINE LEGISLATU 
Legislative Document 
No. 859 
H.P.590 
Hous~ of Representatives, March 5, 2009 
An Act To Control Premium Costs in the Small Group Health 
Insurance Market 
Reference to the Committee on Insurance and Financial Service!3 suggested and ordered 
printed. 
' 
17/~ 
1I1.1lliIC~{ 
MILLICENT M. MacFARLAND 
Clerk 
Presented by Representative TREAT of Hallowell. (GOVERNOR'S BILL) 
Cosponsored by Senator BOWMAN of York. -
Printed on recycled paper 
Be it enacted by the People ofthe State of Maine as follows: 
Sec.!. 24-A MRSA §2BOB-B, sub-§2-B, EffA, as amended by PL 2007, c. 629, 
Pt. M, §7, is further amended to read: 
. 
. 
A. . The superintendent shall. disapprove any premium rates filed by any carrier, 
whether initial orrevised, for a small group health plan unless it is anticipated that the 
aggregate benefits estimated to be paid under all the small group health plans 
maintained in force by the carrier for the period for which coverage is to be provided 
will return to policyholders at least ~ 
78% of the aggregate premiums collected for 
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those policies, as determined in accordance with accepted actuarial principles and 
practices and on the basis' of incurred claims experience and earned premiums. For· 
the purposes of this calculation, any payments paid pursuant to feH:Ref section 6913 
must be treated as incurred claims. 
Sec. 2. 24-A MRSA §2BOB-B, sub-§2-B, ~, as enacted by PL 2003, c. 469, Pt. 
E, § 16, is amended to read: 
E. Any filing of rates, rating formulas. and modifications that satisfies the criteria set 
forth in this paragraph is subject to the provisions of paragraph F: 
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(1) The proposed rate for any group or subgroup does not include a unit cost 
change that exceeds the index of inflation multiplied by 1.5, excluding any 
approved rate differential based on age. For the purpos'es of this subparagraph, 
"index of inflation" means the rate of increase in medical costs for a section of 
. 
. . 
the United States selected by the superintendent that includes this State for the 
inost recent 12-month period immediately preceding the date of the filing for 
which data are available; and 
(2) The carrier demonstrates in accordance with generally accepted actuarial 
principles and practices consistently applied that, as of a date no more than 210 
days prior to the filing, the ratio of benefits incurred to premiums earned averages 
no less than ~ 
80% for the previous 36-month period. 
Sec. 3. 24-A MRSA §2BOB-B, sub-§2-C, ~C, as amended by PL 2007, c. 629, 
Pt. M, § 1 0, is further amended to read: 
. 
C. If incurred claims were less than ~ 
80% of aggregate earned premiums over a 
continuous 36-month period, the carrier shall refund a percentage of the premium to 
the current in-force policyholder. 
For the purposes of calculating this loss-ratio 
percentage, any payments paid pursuant to feH:Ref section 6913 must be treated as 
incurred claims. The excess premium is the amount of premium above that amount 
necessary to achieve a ~ 
80%'loss ratio for all of the carrier's small group policies 
.J 
during the same 36-month period. The refund must be distributed to policyholders in 
an amount reasonably calculated to correspond to the aggregate experience of all 
policyholders holding policies having similar benefits. The total of all refunds must 
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equal the excess premiums. 
(1) For determination of loss-ratio percentages in 2005, actual aggregate incurred 
claims expense~ include expenses incurred in 2005 and projected expenses for 
2006 and 2007, 
For determination of loss-ratio percentages in 2006, actual 
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incurred claims expenses include expenses in 2005 and 2006 and projected 
expenses for 2007. 
(2) The superintendent may waive the requirement for refunds during the first 3 
years after the effective date of this subsection .. 
SUMMARY 
This bill requires a benefits-incurred-to-premiums-eamed loss ratio of 78% for one 
.year or 80% over a 3-year average in the small group insurance market.