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House Bill 1330: The All-Payer Database is a Transparency Trojan Horse

Opinion Editorial
March 1, 2010

By Linda Gorman

House Bill 1330 would create an “all-payer health claims database” in Colorado. Bill supporters claim government can reduce health care costs through “transparent public reporting of health care information.” In fact, the bill is a transparency Trojan Horse. It will make your most personal actions transparent to government officials, officials who have no business keeping track of what kind of health care you buy or what you pay for it.

The bill authorizes the state to collect information on every health care transaction in the state, including information from private medical records, insurer files, and hospitals.

People who refuse to comply can be fined. There is no limit to the fines that may be assessed.

The data that can be requisitioned and stored include individual information on physical functioning, medical treatment, supposed mental stability, marital problems, family structure, sexual habits, addictions, adherence to government health recommendations, and individual financial arrangements. If your teenager filled out the kind of questionnaire that is standard in pediatric practices, it may also contain information on whether you own a firearm, your household’s illegal drug use, how well your child does in school, and whether your child or his friends have ever broken the law.

Since no one can opt out of the database the bill creates, any information in it could potentially used against anyone who decides to run for office, get a professional license, apply for a security clearance, or make trouble for state government.

The development of the database is to be financed by gifts, grants, and donations from unknown sources with unknown agendas. The design of the database is controlled by an unknown “Administrator” who will decide who your data will be shared with and the form it will take.

Naturally the bill directs that the data be securely stored.

Tell that to the 3.4 million Colorado residents who, as the State Auditor’s Office said in May, 2008, have had their unencrypted personal information sent over the Internet and telephone lines on a daily, weekly, and monthly basis by the Department of Motor Vehicles.

Tell that to the 1.4 million people who had personal information in Colorado’s State Directory of New Hires, the state’s “centralized, confidential, and secure” repository for new hire data reported by employers in the State of Colorado. Their personal data was exposed in 2006 when a desktop computer was stolen from a state contractor processing child support payments for Colorado’s Department of Human Services.

The bill says that the information collected will be used to develop measurements that can be used for “continuous review of health care utilization, expenditures, and quality and safety performance in Colorado.” Insurers will also use them to pay physicians for performance.

Pay-for-performance and publicly reported compliance with “best practice” measures defined by third party bureaucrats encourage providers to game the system. After New York began publicly reporting mortality rates for heart surgery, for example, surgeons began avoiding high risk cases in order to burnish their metrics and sick people had to travel out-of-state to get surgery.

A 2007 article in the journal Health Affairs hypothesized that public reporting of performance metrics are most likely to harm the poor and minorities. To produce good scores, providers may avoid people who find it difficult to comply with “health improvement programs” due to language barriers, chaotic work schedules, multiple illnesses, or difficult household circumstances. In 2009, Ruth McDonald and Martin Roland wrote in the Annuals of Family Medicine that applying pay-for-performance measures to primary care practices in California produced unintended consequences, including “forced disenrollment,” of patients perceived to be noncompliant.

This information systems required by this bill will increase health care costs. But even if it reduced them, freedom from coercion by government is more important than controlling health care costs. With no limits on how the data collected can be used to coerce individual behavior, this bill poses a grave threat to both medical privacy and individual liberty.

Linda Gorman directs the Health Care Policy Center at the Independence Institute.