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The Economic Impacts of HIPAA

The Health Insurance Portability and Accountability Act (HIPAA) is a piece of legislation voted into effect by Congress in 1996 that aims to protect the personal health information of patients. According to the U.S. Department of Health and Human Services (HHS), information such as conversations with doctors and nurses, billing information and information in your medical record are protected. Enacting legislation like the HIPAA can provide certain benefits, but new legislation can have a variety of economic effects that are not necessarily positive.

  1. Compliance

    • Whenever a new piece of legislation goes into effect, the entities that the legislation affects must move toward complying with the legislation. Health providers who are not in compliance with the HIPAA may face penalties. According to the UC Davis Health System, wrongful disclosure of health information can result in fines up to $250,000 and up to 10 years of jail time. Considering the severe penalties of noncompliance, health care providers must spend extra time and energy to avoid incurring penalties. This can potentially put upward pressure on the overall cost of health care.

    Research and Development

    • The HIPAA can potentially have a negative effect on health research and development, which may reduce the amount of new health advances and studies that could potentially benefit the average consumer. Since the HIPAA restricts the amount of health information that is accessible to researchers, they cannot gather data as easily. Reduced access to information can result in costly and less effective research. A study performed by the American Cancer Society concluded that the "enactment of HIPAA initially placed a considerable burden on research time and costs" and that "recruitment costs and time are likely to be greater than those observed before HIPAA" even if measures are taken to reduce the impact of the law. More costly research and development could potentially impact the rate of change in average life expectancy. While life expectancy tends to increase over time due to better technology, barriers to research could slow the rate of increase.

    While Collar Crime

    • While certain aspects of the HIPAA may lead to negative economic and social outcomes, the HIPAA has provisions that help prevent fraudulent use of medical information, which can prevent personal information from getting into the wrong hands. The penalties for releasing medical information can help prevent the sale of information to unauthorized parties. Information that is more restricted can reduce the chances of crimes like identity theft, which is a common cause of financial problems and wasted resources.

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