Does Obamacare’s Central Nervous System Threaten Privacy?

Computer Crash

Understandably, the largest overhaul of the U.S. health care system in 50 years has required an equally large and equally complex computer system, which is incidentally one of the largest computer systems created in the government’s history. With a data network of this magnitude, concerns for personal privacy have been growing.

Nicknamed “the Hub,” the $267-million computer system designed by a unit of UnitedHealth Group (NYSE:UNH) is the crucial framework upon which the success of the Affordable Care Act rests. One of the primary reform aims of Affordable Care Act is to ensure every American is insured, and the primary vehicle of that goal are the state-run or federally facilitated exchanges.

To keep the insurance plans offered on the exchanges affordable, Americans whose employers do not offer insurance and who make between 100 percent and 400 percent of the federal poverty line — which tops out at around $45,960 for an individual and $92,000 for a household of four — will be given a federal tax credit to subsidize the cost. But to determine whether an applicant is eligible for the subsidy or if they can buy medical coverage on the exchanges, a system must link the databases of seven U.S. agencies, including the Internal Revenue Service.

The Congressional Budget Office has estimated that as many as 7 million people will enroll in the exchanges in the next year, and all data — from identity to citizenship to income to family size — must be verified. A computer system is also needed to find out which applicants may be able to access insurance coverage through other federal programs, such as current or former members of the military.

On Wednesday, several officials — including Marilyn Tavenner, the administrator of the Department of Health and Human Services’s Centers for Medicare and Medicaid Services (NYSE:CMS) and Henry Chao, the deputy chief information officer of CMS — testified before the House of Representatives to help lawmakers evaluate the privacy, security, and fraud concerns related to the information-sharing apparatus.

Both Tavenner and Chao reassured representatives on the Subcommittee on Energy Policy, Health Care, and Entitlements that privacy and security measures, as well as the necessary technological tools, would be ready for the October 1 exchange deadline. In fact, the system is expected to be finished and tested by September 1, a month before the exchanges open for enrollment.

“We have been engaged in a great deal of discussions to make sure these standards are incredibly strong,” Chiquita Brooks-Lasure, the deputy director of the Center for Consumer Information and Insurance Oversight, told Bloomberg in a telephone interview. The standards to which she referred are the strict rules on security standards that all federal agencies and parties that use the data hub must sign.

While officials told representatives that no medical records or personally identifiable information will be stored on the hub, which is a router, Republican lawmakers have expressed worries that the vast amount of data the computer system is at risk. Consumers could be threatened if computer hackers gain access to the system or if officials accidentally misuse the equipment.

Even more concerning for lawmakers is the possibility that government officials could purposefully misappropriate the data. Tavenner did note during the hearing that personally identifiable information will be kept on the exchanges, although that is a different system than the hub.

“It’s information on 300 million Americans, all compiled in one place — what could go wrong?” Republican Rep. James Lankford of Oklahoma, presiding over the committee hearing, told Bloomberg.

Here’s how the main U.S. indexes traded on Thursday:

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