In Accepting Privacy Rules, Bush Avoids Image of Favoring ‘Business At the Expense of Consumers’

President Bush on April 12 agreed to "move ahead" with a medical privacy regulation issued in the waning days of the Clinton administration, but he "left open the possibility" that his administration may "significantly softe[n]" the rule, the Washington Post reports (Goldstein/O'Harrow, Washington Post, 4/13). The "sweeping" rule, set to take effect April 14, will establish the "first comprehensive" federal standards for patient privacy (Pear, New York Times, 4/13). Most health care providers will have two years to comply with the rules (Sanders, Los Angeles Times, 4/13). "I believe that we must protect both vital health care services and the right of every American to have confidence that his or her personal medical records will remain private," Bush said (Pugh, Philadelphia Inquirer, 4/13). However, in a "nod to industry groups," which have run an "aggressive campaign" against the rules, the Bush administration will likely modify several provisions in the regulation, "making the rules more appealing" to hospitals, insurers and drug companies. Those groups have maintained that the rules would "cost billions of dollars to implement" and may "interfere with patient care" (Los Angeles Times, 4/13). "Everybody recognized there will have to be some modifications," HHS Secretary Tommy Thompson said, adding, "That doesn't mean there are going to be wholesale changes. It's more of a way to simplify and reduce some of the onerous financial burden and include a degree of common sense" (Washington Post, 4/13).

Taking 'Political Cover'?
The New York Times reports that Bush's decision on the medical privacy rule represented a "victory" for consumer groups and privacy advocates, but not an "utter defeat" for the industry and insurance companies. According to the New York Times, the move allowed Bush to "avoi[d] the criticism that surrounded the rollback" of other Clinton administration regulations, such as an ergonomics rule that he repealed last month, which could have "cement[ed] an image of his administration as one that favors business at the expense of consumers" (New York Times, 4/13). The Boston Globe adds that "further delaying or changing the rules on health privacy may have proved too politically unpalatable" for Bush, "despite industry pressure" (Boston Globe, 4/13). The Washington Post calls Bush's decision a "Rorschach test" for opponents and backers of the rule, adding that the move would likely "prolong the struggle" over the "heated" issue (Washington Post, 4/13). In addition, the Wall Street Journal reports that Bush aides say that his decision, while "shocking" to the health industry, represents a "much broader presidential impulse" to back privacy protections for Americans, "even though business allies sometimes will object." Republicans say that privacy issues could provide Bush with "some much needed political cover." The Journal reports that the "Bush mindset on privacy" could have "significant consequences on a variety of businesses," especially those that sell, obtain or trade personal data (Wall Street Journal, 4/13).

Industry 'Dismayed'
Bush's decision to implement the medical privacy rule "dismayed" health industry officials. Scott Serota, president of the BlueCross BlueShield Association, called the regulation an "operational nightmare" for patients and health plans, and the American Hospital Association expressed "profoun[d] disappoint[ment]" over the president's decision (VandeHei et al., Wall Street Journal, 4/13). "These rules could create a bureaucratic nightmare ... needlessly adding billions to the nation's medical bills," AHA spokesperson Dick Davidson said (Appleby, USA Today, 4/13). The Federation of American Hospitals called the rule "unworkable" (Wall Street Journal, 4/13). Karen Ignagni, president of the American Association of Health Plans, said, "We share the goal of protecting the privacy of consumers, but quality health care should not be sacrificed in the process" (Philadelphia Inquirer, 4/13). "The rule prescribes burdensome documentation and recordkeeping provisions on physicians that are unlikely to provide any real added privacy to patients," Dr. Donald Palmisano of the American Medical Association said (Las Vegas Sun, 4/12). Healthcare Leadership Council Director Mary Grealy added, "It is way overly burdensome. I think it will completely clog the health care system if we don't make some changes" (Shadid, Boston Globe, 4/13). Industry leaders "vowed" to "press" HHS officials to "reconsider" provisions in the rule that they "argue" would "hurt care and raise costs." The government has estimated that complying with the regulation would cost the health industry $18 billion over 10 years, but an industry study put the cost at $40 billion over five years (Washington Post, 4/13).

'Victory' for Privacy Groups
Meanwhile, consumer groups, privacy advocates and Democrats praised Bush's decision as a "landmark in the history in American medicine" (New York Times, 4/13). "We are pleasantly surprised that the administration didn't cave in to an aggressive campaign to derail these regulations," Joy Pritts, senior counsel for the Health Privacy Project at Georgetown University, said (Philadelphia Inquirer, 4/13). Janlori Goldman, the project's director, added, "The administration did the right thing" (McQueen, Associated Press, 4/13). The American Civil Liberties Union also "welcomed" the "surprise" decision, and Peter Swire, chief counselor for privacy in the Clinton White House, said, "Today's decision by President Bush sends a clear signal to industry that it's time to stop the delay and work on protecting privacy." Among lawmakers, Rep. Edward Markey (D-Mass.) called Bush's decision "a huge step forward for the medical privacy rights of all Americans" (New York Times, 4/13). Sen. Patrick Leahy (D-Vt.) added that the Bush administration "took the right step" by implementing the patient privacy rule (Washington Post, 4/13). In addition, Rep. Pete Stark (D-Calif.) said, "I commend the administration ... for moving forward with immediate implementation of the medical privacy regulation" (Stark release, 4/12). However, privacy advocates said that they would "continue to monitor" the proposed modifications to the rule to ensure that the rules were "not weakened" (Los Angeles Times, 4/13). "We hope the administration moves with great care when considering any modifications to this rule," Families USA Executive Director Ron Pollack said (Las Vegas Sun, 4/12).