James A. Leach, Chairman

Opening Statement
Of Rep. James A. Leach
Chairman, House Banking and Financial Services Committee
Hearing on H.R. 4585

The Committee meets today to hear testimony on H.R. 4585, the Medical Financial Privacy Protection Act, which would protect the most sensitive information about an individual that is held by a financial firm.

Before summarizing this proposal let me review the legislative background of this issue.

Last year, in consideration of H.R. 10, the Financial Services Modernization Act, this Committee for the first time in the long history of bank reform legislation approved a privacy package. In addition to erecting privacy shields for American financial services customers, including a ban on the transfer of information to third party telemarketers and a clamp down on identity theft, that bill, as it left this Committee contained a provision that would have walled off the medical records held by an insurance company from other affiliates of a financial services holding company, as well as non-affiliated third parties.

H.R. 10 passed the House with the strongest privacy protections ever incorporated into banking law, importantly including the medical privacy provisions that originated in our Committee. Later, however, at the request of the Administration and the insistence of the minority party on the floor that the issue be addressed through executive action rather than legislation, the medical privacy provisions were dropped from the final version of the bill.

Now, it appears that consensus is developing among the interested parties in the government on the desirability of moving forward with a legislative approach to medical privacy. In this regard, the language of H.R. 4585 is consistent with the medical privacy recommendations forwarded to Congress by the Treasury Department six weeks ago and responds to the concerns outlined by the President in his April 30 speech at Eastern Michigan University in Ypsilanti. And in an important disclosure area that deals with information concerning mental health or condition, H.R. 4585 goes beyond the Administration recommendations.

The legislation is also consistent with the financial industry accord announced last week. The industry is to be complimented for agreeing voluntarily to provide a credible degree of privacy protection of the medical records of their customers. Some would even contend that because of this voluntary agreement and because of the industry’s general record of safeguarding medical records, any legislation represents a solution seeking a problem.

Yet, the background of legislative concern in this area relates less to any history of past industry abuse or of new financial industry organization, but rather to the implications of modern information technology as it relates to new genetics science advances. So much more can now be known about and predicted about individuals based on medical testing that it is important to put common sense restraints in place before temptingly improper industrial practices begin.

The major provisions of the bill, H.R. 4585, which is the principal subject matter of the hearing, are as follows:

• Nothing will be done to modify, limit or supersede medical privacy standards promulgated by the Secretary of Health and Human Services pursuant to authority granted under the Health Insurance Portability and Accountability Act.

The approach contemplated in H.R. 4585 is designed to augment the privacy provisions of the Financial Modernization bill passed last year. Rules to implement those privacy protections are in the process of being implemented by the Executive Branch, and I believe I can speak for all Members of the Committee in encouraging the regulators to move expeditiously so that all Americans can be more secure in the privacy of their financial information.