January 20, 1999

January 20, 1999 | News Releases on Health Care

Patient Confidantiality Endangered By Employer Access to Health...


New System of Worker-Owned Health Plans Would Restore Privacy

WASHINGTON, JAN. 20, 1999-With more and more employers seeking detailed medical information about their employees, a new Heritage Foundation study says that switching to a system of worker-owned health plans would help restore patient privacy. President Clinton acknowledged this growing problem in his State of the Union address and pledged to help "protect the privacy of medical records."

Under the current health-care system, employers own their workers' health plans and regularly review employee medical records in an effort to control health costs. The insurers who manage health-care plans are "obligated to show their clients-the employers-what they are getting for their money," write Stuart Butler, vice president for Domestic and Economic Policy, and Carrie Gavora, a former Heritage health-care policy analyst now with the Healthcare Leadership Council.

The unlikely culprit behind this problem is the tax code, they say. Americans are penalized if they buy health insurance on their own, because health insurance typically is tax-free only when purchased through one's employer. Under such a system, employers are naturally interested in reviewing sensitive medical information that may help them reduce costs. Indeed, recent court decisions have upheld employer access to medical information.

But some industry watchers are concerned that employers also use this information to make personnel decisions. In one survey of Fortune 500 companies, 35 percent reported using medical histories to make personnel decisions. "Employees often authorize access to personal health records when applying for a job or filing a claim without even knowing that they are doing it," Butler and Gavora write.

Employers are not the only ones able to access patient information, the analysts note. The list includes lab technicians, clinical researchers, pharmaceutical companies and medical device manufacturers. Most are well-intentioned, they concede, but "the greater the number of second and third parties with access to patients' personal health information, the greater the potential for abuse of that information."

Without a change to the tax code that allows workers to buy their own health coverage, Americans will find it virtually impossible to reverse the erosion of their health-care privacy, Butler and Gavora write. Congress is currently considering several proposals that would help break the link between employment and health insurance, including one by Reps. James McCrery, R-La., and William Thomas, R-Calif., that would provide income tax credits to Americans who purchase their own health plans. Butler and Gavora say these proposals "would reduce the bias against employees choosing and owning their own health plans-and medical information."

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