AUGUSTA – Members of the House of Representatives on Monday shot down a bill intended to lift the regulatory burden on health insurance companies and dismantle certain provisions of Gov. John Baldacci’s 2003 Dirigo health reforms.

LD 1047, sponsored by Rep. Michael Vaughn, R-Durham, would eliminate certain regulations affecting individual health plans, allowing insurers to refuse to cover people with pre-existing conditions and granting insurers greater freedom in establishing monthly premium rates. It would establish a high-risk pool for people with especially high health care costs and allow insurers to charge up to 50 percent higher rates for individuals assigned to that pool.

The bill also would do away with the State Health Plan, which creates a blueprint for essential health care services within established geographic areas. In addition, it would dismantle the state’s tightened-up certificate of need process, which governs spending by hospitals.

Republicans speaking in support of the bill on Monday argued it would promote healthy competition among insurance companies and drive down the cost of the policies they offer. But Democrats said the proposal goes too far and would only make it easier for insurers to increase profits while driving more Mainers out of health care coverage.

The House rejected the measure 78-60. It now moves to the Senate for debate.

Vaughn first submitted his legislation a year ago, but it was carried over to the current session.

Less-sweeping changes to Maine’s insurance regulations are proposed in legislation that ties market reforms to a new funding mechanism for Baldacci’s DirigoChoice health insurance program. That legislation is being fine-tuned and is expected to reach lawmakers soon.