SEC. 3. PURPOSES. 
The purposes of Act are— 
(1) to make it possible for individuals, employ-
ees, and the self-employed to purchase and own their 
own health insurance without suffering any negative 
tax consequences; 
(2) to enable individuals to make their own in-
formed choice of the method by which their health 
care is provided, the persons who deliver it, and the 
price they wish to pay for it; 
(3) to assist individuals in obtaining and in 
paying for basic health care services; 
(4) to render patients and deliverers sensitive to 
the cost of health care, giving them both the incen-
tive and the ability to restrain undesired increases in 
health care costs; 
(5) to simplify and rationalize the payment 
mechanism for health care services; 
(6) to foster the development of numerous, var-
ied, and innovative systems of providing health care 
which will compete against each other in terms of 
price, service, and quality, and thus allow the Amer-
ican people to benefit from competitive forces which 
will reward efficient and effective deliverers and 
eliminate those which provide unsatisfactory quality 
of care or are inefficient;
(7) to replace governmental regulation of the 
economic aspects of health care delivery with indi-
vidual choice, private initiative, and marketplace in-
centives and disciplines; 
(8) to encourage the development of systems of 
delivering health care which are capable of supplying 
a broad range of health care services in a com-
prehensive and systematic manner, and 
(9) to preserve the independence of health care 
deliverers and encourage their close identification 
with and their accountability to the individuals they 
serve. 
TITLE I—HEALTHMARTS 
SEC. 101. EXPANSION OF CONSUMER CHOICE THROUGH 
HEALTHMARTS. 
The Public Health Service Act is amended by adding 
at the end the following new title: 
‘‘TITLE XXIX—HEALTHMARTS 
‘‘SEC. 2901. DEFINITION OF HEALTHMART. 
‘‘(a) IN GENERAL.—For purposes of this title, the 
term ‘HealthMart’ means a legal entity that meets the fol-
lowing requirements: 
‘‘(1) ORGANIZATION.—The HealthMart is an 
organization operated under the direction of a board
of directors which is composed of representatives of 
not fewer than 2 from each of the following: 
‘‘(A) Employers. 
‘‘(B) Employees. 
‘‘(C) Individuals (other than those de-
scribed in subparagraph (B)) who are eligible to 
participate in the HealthMart. 
‘‘(D) Health care providers, which may be 
physicians, other health care professionals, 
health care facilities, or any combination there-
of. 
‘‘(E) Entities, such as insurance compa-
nies, health maintenance organizations, and li-
censed provider-sponsored organizations, that 
underwrite or administer health benefits cov-
erage. 
‘‘(2) 
OFFERING
HEALTH
BENEFITS
COV-
ERAGE.— 
‘‘(A) 
DIFFERENT
GROUPS.—The 
HealthMart, in conjunction with those health 
insurance issuers that offer health benefits cov-
erage through the HealthMart, makes available 
health benefits coverage in the manner de-
scribed in subsection (b) to all employers, eligi-
ble employees, and individuals in the manner
described in subsection (c)(2) at rates (includ-
ing employer’s and employee’s share, if applica-
ble) that are established by the health insurance 
issuer on a policy or product specific basis and 
that may vary only as permissible under State 
law. A HealthMart is deemed to be a group 
health plan for purposes of applying section 702 
of the Employee Retirement Income Security 
Act of 1974, section 2702 of this Act, and sec-
tion 9802(b) of the Internal Revenue Code of 
1986 (which limit variation among similarly sit-
uated individuals of required premiums for 
health benefits coverage on the basis of health 
status-related factors). 
‘‘(B) NONDISCRIMINATION
IN
COVERAGE 
OFFERED.— 
‘‘(i) IN GENERAL.—Subject to clause 
(ii), the HealthMart may not offer health 
benefits coverage to an eligible employee or 
individual in a geographic area (as speci-
fied under paragraph (3)(A)) unless the 
same coverage is offered to all such em-
ployees or individuals in the same geo-
graphic area. Section 2711(a)(1)(B) of this 
Act limits denial of enrollment of certain