Colorado’s All-Payer Database Raises Privacy Concerns

Published May 31, 2016

Colorado legislators are proposing to create an “all-payer database” which will collect and store information on all those who give or receive health care in the state. They claim they’re seeking the right balance between bringing transparency to the health care market and the privacy concerns of individuals.

Colorado’s House Bill 10-1330 gives the state’s executive director of health policy and financing the power to create the database.

Rep Daniel Kagan (D-Denver) introduced the bill with cosponsor Rep John Kefalas (D-Larimer). Sen John Morse (D-Manitou Springs) sponsored a companion bill in the senate.

‘There Needs to Be Light’

“I decided to introduce this bill because the marketplace for health care operates in total darkness. Buyers don’t know what anything costs, what others are paying for the same products, or what works effectively. Sellers know little more,” Kagan said.

“No wonder everyone emerges unsatisfied,” he added. “There needs to be light shed on this marketplace. It is basic economics that a free market only works when there is knowledge on the part of both buyers and sellers.”

According to the bill, the database will use metrics such as “safety, timeliness, effectiveness, efficiency, equity, patient-centeredness, utilization, health outcomes, and cost.” The bill calls for data to be collected on all “consumers, payers, and purchasers.”

Supporters of the bill claim policymakers will be able to analyze pilot plans, evaluate treatment protocols, and see which policies are yielding the best results for patients, encouraging efficient use of resources.

“Colorado residents will be helped a lot. They’ll be able to see prices listed by hospital and by procedure on the Internet,” Kagan said. “They’ll know which providers seem to have the most readmissions and where there are tradeoffs between luxury and price. Shopping for medical services will be rational for the first time in Colorado history.”


Privacy Concerns

The legislation raises privacy concerns, however, says Devon Herrick, a senior policy analyst with the National Center for Policy Analysis, a Dallas, Texas-based think tank.

“House Bill 10-1330 raises privacy and security concerns. Not only will the state government intrude in a private transaction between patients and their physicians; it will also have to safeguard the data from abuse or theft,” Herrick said.

“I’m aware of these concerns. I’m confident we can, like other states that have implemented such plans, completely protect our citizens’ privacy,” said Kagan.


‘Eliminates Health Care Privacy’

Linda Gorman, director of the Colorado-based Independence Institute’s Health Policy Center, disagrees with Kagan.

“This legislation basically eliminates all health care privacy in Colorado.” She explains, “It gives the state government access to all health information for any paid service, even if privately paid for. It also authorizes the government to share personal health information with any third party for any purpose and to audit providers for data accuracy; no one may opt out.”

“There is no known way to secure the private information that the state proposes to collect,” said Gorman, “Electronic databases that make data widely available are inherently insecure. Records containing detailed information on individuals make it possible to accurately guess identities without unique identifiers.”


Data Could Be Misused

“This proposal appears to be an experiment run by the State Quality Improvement Institute, which is a creation of The Commonwealth Fund and the Academy of Health begun in 2008 to get states to offer up their populations for ‘systemic transformation.’ Colorado is one of nine states in the experiment,” Gorman said.

The Commonwealth Fund has come under criticism in the past, Gorman says, for advocating government-run health care policies over market-based answers.

“The bill funds the database with money from undisclosed sources with undisclosed agendas that may not be in the best interests of Colorado residents,” said Gorman. “There are unlimited fines for providers who do not participate, while there are no penalties for the misuse of data. The state will control your health care in ways that are likely to make it more expensive and more difficult to get, especially if you are a high-risk patient… [The] information could potentially be used against anyone.”

Gorman says the talk of transparency cannot be taken seriously.

“This is all about data. The only thing this plan has to do with transparency is that it makes your most personal actions completely transparent to government officials,” said Gorman.


Bill Proceeds to Senate

Kagan believes the privacy concerns will fade when people consider the benefits of the legislation for Colorado residents as they shop for health care.

“The benefits of the bill will be enormous,” said Kagan, “For the first time, individual health care consumers will be able to shop sensibly, comparing insurance plans, options, hospitals and practice groups, for both price and quality. Insurers, especially small insurers, will be better able to design their offerings, and better able to negotiate with health care providers, knowing what the market prices are for various procedures.”

The bill passed the Colorado House earlier this year, and will now proceed to the Senate.

“We anticipate having funding in place by the end of 2011, and actual implementation will occur, most probably, during 2012, with rollout of the final product by January 1, 2013,” said Kagan.


Sarah McIntosh ([email protected]) teaches constitutional law and American politics at Wichita State University in Kansas.

Internet Info:

Colorado House Bill 10-1330$FILE/1330_01.pdf