Proposed Standards for Privacy and Individually Identifiable Health Information

VI. Unfunded Mandates

The Unfunded Mandates Reform Act of 1995 (P.L. 104-4) requires cost-benefit and other analyses for rules that would cost more than $100 million in a single year. The proposed rule qualifies as a significant rule under the statute. DHHS has carried out the cost-benefit analysis in sections D and E of this document, which includes a discussion of unfunded costs to the states resulting from this regulation.

A. Future Costs.

DHHS estimates some of the future costs of the proposed rule in Section E of the Preliminary Regulatory Impact Analysis of this document. The reported costs include costs incurred during the compliance period and up to 5 years after the effective date. The same section also includes some qualitative discussion of costs that would occur beyond that time period. Most of the costs of the proposed rule, however, would occur in the years immediately after the publication of a final rule. Future costs beyond the five year period will continue but will not be as great as the initial compliance costs.

B. Particular regions, communities, or industrial sectors.

The proposed rule applies to the health care industry and would, therefore, affect that industry disproportionately. Any long-run increase in the costs of health care services would largely be passed on to the entire population of consumers.

C. National productivity and economic growth.

The proposed rule is not expected to substantially affect productivity or economic growth. It is possible that productivity and growth in certain sectors of the health care industry could be slightly lower than otherwise because of the need to divert research and development resources to compliance activities. The diversion of resources to compliance activities would be temporary. Moreover, DHHS anticipates that, because the benefits of privacy are large, both productivity and economic growth would be higher than in the absence of the proposed rule. In section I.A. of this document, DHHS discusses its expectation that this proposed rule would increase communication among consumers, health plans, and providers and that implementation of privacy protections will lead more people to seek health care. The increased health of the population will lead to increased productivity and economic growth.

D. Full employment and job creation.

Some of the human resources devoted to delivery of health care services would be redirected by the proposed rule. The proposed rule could lead to some short-run changes in employment patterns as a result of the structural changes within the health care industry. The growth of employment (job creation) for the roles typically associated with the health care profession could also be temporarily change but be balanced by an increased need for those who can assist entities with complying with this proposed rule. Therefore, while there could be a temporary slowing of growth in traditional health care professions, that will be offset by a temporary increase in growth in fields that may assist with compliance with this proposed rule (e.g. legal professionals, and management consultants).

E. Exports.

Because the proposed rule does not mandate any changes in products, current export products will not be required to change in any way.

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