LD 1333: What does it do?

Posted: May 17, 2011 | Insurance and Financial Services

L.D. 1333 OVERHAULS Maine’s health insurance market for about 40,000 people – those who buy independently or through employers whose companies have 50 or fewer workers. The legislation:

• Allows companies from every other New England state except Vermont to sell insurance in Maine beginning in 2014. Current law prohibits out-of-state companies from selling insurance here.

• Gives insurance companies more leeway in how much they can charge policyholders based on age. Starting July 1, 2012, some people could pay three times as much for their policies as other people, because of their age. By 2014, the ratio will be 5 to 1. Current law limits the ratio to 1.5 to 1. In 2014, the federal Affordable Care Act will set the ratio at 3 to 1.

• Prohibits insurers from rejecting people for pre-existing conditions. It creates a mechanism for covering insurance costs of people with chronic illnesses.

The nonprofit Maine Guaranteed Access Reinsurance Association will subsidize the insurance of people who have high medical costs. It will be funded by a tax on premiums of as much as $4 per person per month on almost every policyholder in Maine. Legislators and state workers are exempt from the tax.

Only people identified as having pre-existing conditions at the time they apply for insurance are eligible for the subsidy. Insurance carriers will cover those policyholders’ first $7,500 in medical expenses per year. The nonprofit will cover 90 percent of the next $25,000 in expenses, and 100 percent after that.

• Repeals Rule 850, a section of Maine’s insurance code that requires insurers’ provider networks to have primary care physicians within a 30-minute drive of policyholders’ homes, and hospitals within an hour’s drive.

• Allows businesses to band together and form their own insurance companies to cover their employees. The new insurance companies will have to follow the same regulations as other insurance companies.

• Repeals the State Health Plan and eliminates the Advisory Council on Health Systems Development, a 20-member group that analyzes factors that drive health care costs and reports to the Legislature. Hospitals will be allowed to expand without complying with the cost containment provisions in the State Health Plan.