Big Data and Regulatory Arbitrage in Health Care

Abstract

This chapter accepts that data analytics have the potential to make major improvements in the health care system. However, its focus is not big data being used within healthcare, but rather the use of healthcare data for market segmentation or profiling purposes that occurs outside of healthcare space. At root there are some serious weaknesses in healthcare data protection such as the HIPAA federal privacy and security rules. As a result of what is euphemistically called an “uneven policy environment,” increasingly large amounts of sensitive healthcare data exist in a lightly regulated space outside of the reach of traditional healthcare data protection regimes. This leads to regulatory disruption as patients, providers, and healthcare policymakers struggle not only with under-regulation but also with costly indeterminacy as to the when and how such data may or may not be protected. In the context of data brokers, it has enabled successful regulatory arbitrage as they have learned to do in lightly-protected space what they are prohibited from doing in HIPAA-regulated space. This chapter first summarizes the reasons for this contemporary policy environment. It then details the types of legislative reform that have been proposed, before concluding that the specific and general powers of the Federal Trade Commission (FTC) remain the primary defenses against big data abuses.

Keywords: Big Data, health care, privacy, security, regulatory arbitrage, HIPAA, FTC

JEL Classification: K32