Bill Threatens Medical Privacy

Doctors' groups warn that things like domestic violence, psychiatric treatment, alcoholism and adultery could be disclosed under a new bill that would allow financial services companies to merge and share data.

Officials of the American Medical Association and the American Psychiatric Association told a House subcommittee Wednesday that the legislation, recently passed by the House, would violate a principle that patients must consent to the disclosure of medical records.

Disclosure of personal medical data "can jeopardize our careers, our friendships and even our marriages," Dr. Richard Harding, vice president of the psychiatrists' association, said in prepared testimony.

He said the financial services bill "will overturn the principle of patient consent for disclosure of medical records."

The medical data provisions, part of the broad financial services bill that passed the House July 1 in a 343-86 vote, were added after the House Banking Committee had approved the legislation, which would lift Depression-era legal barriers and allow banks, securities firms and insurance companies to merge.

Rep. Marge Roukema, R-N.J., who heads the panel's financial institutions subcommittee, decided to go ahead with the previously scheduled hearing.

Sharing customer data can open lucrative new marketing possibilities -- one of the main reasons banks, brokerages and insurers want to combine. The financial services industries support the legislation, saying it adequately protects consumers' privacy.

"Protecting privacy is good business," said Dan Zielinski, a spokesman for the American Insurance Association. He said the industry has "a stellar record of protecting confidential data."

Opponents of the legislation fear, for example, that medical records of an insurer showing a customer has cancer or AIDS could be used by an affiliated bank to deny a loan.

The new bill is "inadequate to protect patients' sensitive medical information," testified Dr. Donald J. Palmisano, a member of the American Medical Association's board of trustees.

The bill's medical data section prohibits insurance companies from sharing personal medical records with other types of companies, including financial firms with which they are affiliated, unless customers give their express written consent.

There are exceptions, however, such as provisions that would:

• Allow health insurance companies to share medical data with life insurers when people apply for life insurance policies.
• Let financial companies share a consumer's medical data for research projects. Because the legislation does not define such research projects, Palmisano said, companies could assume they include marketing evaluations or consumer profiling.

A top Clinton administratioofficial also said the medical data provisions were too weak.

"No consumer expects that in consenting to a physical examination for an insurance policy, he or she is endangering an ability to obtain credit or employment," Treasury Undersecretary Gary Gensler said.

The administration, however, supports the financial services legislation in principle.

In May, the Senate passed a substantially different version that does not include most of the financial and medical privacy provisions. The Senate is considering separate legislation covering health and medical privacy.