The Health Insurance Portability and Accountability Act (HIPAA) was enacted in 1996 to protect the privacy of patient health information. Its privacy rule restricts access to a patient’s medical records to authorized individuals and limits how information can be shared without patient consent. While the intent of this rule is reasonable—preventing misuse of sensitive medical data—its implementation can come at a steep cost. In practice, HIPAA’s stringent requirements may harm patients, create a chilling effect on medical researchers and healthcare providers, and significantly increase medical costs.

One specific aspect of HIPAA compliance involves monitoring who accesses patient records and why. For instance, a nurse’s review of his or her patient’s full medical chart, including notes written by other healthcare providers, could trigger an audit to ensure compliance. Even when the nurse’s actions are entirely appropriate, the process may involve interviews, detailed reviews, and reports to regulatory bodies. This scrutiny can discourage healthcare professionals from accessing the information they need to provide comprehensive care, potentially endangering patients’ lives. …

The opportunity cost is equally significant. Resources allocated to enforcing HIPAA rules might save more lives if redirected to public health initiatives, medical research, or increased staffing. A compliance officer investigating routine chart access, for instance, could instead focus on improving systems that ensure better coordination of care across departments. Additionally, the chilling effect discourages proactive care, as providers fear being penalized for reasonable actions that fall into regulatory gray areas.

The root of the problem lies in the regulation’s failure to account for the realities of healthcare delivery. Privacy protections must be balanced with the need for timely and effective care. Blanket rules that treat all access to medical records as potentially inappropriate create unnecessary hurdles for providers and harm the very people HIPAA is designed to protect.

This issue illustrates a broader problem: poorly-thought-out regulations often lead to unintended consequences, including perverse incentives and disincentives—such as discouraging healthcare workers from fully understanding their patients’ medical histories. When policymakers focus narrowly on one goal—in this case, protecting privacy—without considering trade-offs, the resulting rules can do more harm than good. Moreover, the lack of effective feedback mechanisms allows regulatory shortcomings to persist long after they become evident. Too often, even well-intentioned regulations impose costs that far outweigh their benefits.