No. 25
June 28, 1999
By Mark Schiller*

These are not good times for Americans who value their privacy. Things will get much worse if, as planned, the government institutes a national patient identification system and a massive federal medical database.

Medical database advocates have touted ease of access to individual patient data as one of the benefits of a national database, with the idea that physicians could quickly retrieve a patient’s entire medical history. However, countless physicians, other health-care professionals, hospital administrators, and insurance company employees would be able to access medical records and add data to them. Just forgetting to turn off a terminal on a hospital ward would endanger someone’s privacy. Soon private medical information would be open to the prying eyes of any bureaucrat or hacker.

The benefits of a national health database are minimal but the harms are great. Some individuals would avoid care to prevent information from entering their database file. They might be embarrassed about venereal disease, substance abuse, or emotional problems being open to scrutiny. They might also fear their medical history being made available to potential employers, insurance companies, competitors, and others without their knowledge.

The assault on our medical privacy is the latest in a series of attempts by the government to collect seemingly any and all sensitive information possible about its citizens. Florida, Colorado, and South Carolina are selling 22 million drivers’ license photographs to a company setting up a national photo database. Other states routinely sell information about property transfers, vehicular registrations, and professional licenses.

California is now following the lead of other states and will enact a program to sell confidential information about their residents’ income to banks, lenders, and car dealers. While sharing this type of information with private businesses could benefit consumers, it raises concerns about whether the government should be involved. If this information is so valuable to business, individuals should be able to decide where and what information is shared—and at what price. Furthermore, one can only imagine the lobbying efforts taking place for states to mandate data collection that will benefit politically-influential businesses.

The Bank Secrecy Act of 1970 ushered in the federal assault on privacy with its mandates that banks report to the government certain financial transactions that might indicate illegal activity. It also requires banks to collect information about customers not even suspected of crimes to the Treasury’s FinCEN (the Financial Crime Enforcement Network), which collates this with various other state and federal databases.

A last minute grassroots internet petition campaign forced the federal bank regulatory agencies—the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve, and others—to drop their "Know Your Customer" regulations, which would have required financial institutions to monitor customers’ accounts, establish a "profile" of the customers’ "regular and expected" transactions and report all other activities as "suspicious" and require the institutions to determine the customers’ source of funds.

America narrowly avoided a national ID card system when Ron Paul (R-TX) and Bob Barr (R-GA) successfully defunded the Department of Transportation’s effort to institute national requirements for state drivers’ licenses, turning them into national ID cards. The approved IDs would have become necessary to get a job, open a bank account, apply for Social Security, or even take an airplane flight. Paul has offered an amendment to repeal the program altogether, which will soon be up for a vote.

The focus now turns to medical privacy, perhaps the most serious issue. Maryland currently requires physicians to report sensitive data about every patient-physician encounter. The only way for Maryland residents to ensure privacy is to see a physician in a neighboring state.

It will soon be more difficult for all Americans to safeguard their privacy. The Health Care Portability and Accountability Act of 1996 directed the Department of Health and Human Services to assign unique patient identification numbers to everyone. The government will use this to develop a massive, national health database enabling bureaucrats to collect public-health and epidemiological data—tracking everyone from cradle to grave.

A national medical database is supposed to help researchers and policymakers. But in all research, the quality of data is crucial and the quality of the medical database will be particularly poor. Physicians and others make errors in entering data. Their standards in reporting outcomes differ, and physicians sometimes make incorrect diagnoses. Diagnoses already vary greatly, not only because of physician variations, but because of attempts to maneuver around complex billing codes, obtuse reimbursement practices, and confusing regulations.

Congressman Paul was able to defund temporarily the initiative to institute the medical ID program. However, if Congress takes no further action by August, the system will be up and running early next year, with irreparable damage to individual privacy. The resulting extension of government power far outweighs the minor and unrealistic benefits of a national patient ID. Congress should show the courage to repair its mistake and reverse this dangerous trend.

*Mark Schiller, M.D. is a practicing psychiatrist and a Senior Fellow in Medical Studies at the California-based Pacific Research Institute for Public Policy.

For additional information, contact Naomi Lopez at (415) 989-0833.