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Congress Awakens on Privacy

March 08, 2001

Consumers certainly want to rein in banks, HMOs, media companies and other businesses that collect and exchange personal data about them. But they also want the conveniences made possible by information sharing, like one-click shopping on the Internet, up-to-date and accurate medical and pharmacy records and electronic discount coupons tailored to the products that interest them. At least federal lawmakers are finally waking up to the issue, with the backing of industry leaders who fear the states will take over if the federal government fails to act.

Last week, House and Senate committees began meeting to consider at least 18 electronic privacy bills that have been introduced this year alone. A good start would be a new bill by Sens. John McCain (R-Ariz.) and John F. Kerry (D-Mass.) that would require Web site owners to tell customers what personal data they collect and let them "opt out" of the information sharing--clicking an on-screen icon to bar the sharing of information about them with third parties.

Privacy hawks in public interest groups are pushing more sweeping "opt-in" legislation that would require Web site owners to obtain consumers' consent before sharing personal information. However, that legislation lacks the necessary votes for passage because of opposition stoked by powerful companies like AOL Time Warner, which believe it would prevent them from leveraging the highly salable information they collect about their customers. However, AOL as well as Intel and Disney do favor some kind of federal privacy law as a way of heading off a raft of conflicting state laws that could stifle Internet commerce. The federal failure to act has generated more than 100 electronic privacy bills before 33 state legislatures.

House Energy and Commerce Chairman Billy Tauzin (R-La.) articulated the companies' concern last week, vowing that "the last thing we ought to do is turn this over to [state] regulators."

In the Bush administration, Health and Human Services Secretary Tommy Thompson will have to strike a similar balance with Clinton Administration medical privacy rules that he is now evaluating. Drug companies, hospitals and other health businesses that exchange medical information electronically want Thompson to repeal the Clinton rules before they are scheduled to take effect April 14.

Thompson could delay implementation of the most contentious Clinton privacy rules, such as one that requires doctors to get written permission from patients before sharing information on routine matters like billing. But he should certainly retain a requirement for patient permission before more sensitive transfers, such as between a doctor and an employer. Thompson should also support a provision guaranteeing Americans what should have long ago been their basic right: to see and correct their medical records.

The Internet "opt-out" legislation that has become viable this year because of support from companies like AOL Time Warner leaves many areas of possible privacy violations unchecked. But the current anarchy, in which banks, HMOs, Web site owners and others now exchange information without any oversight whatsoever, is much worse.

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