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Economics of Medical Privacy

By Alfred Norman, Brian Foshburg, John Frederick, and Lillian Liao




To create private medical records, the first task is a careful analysis of the demands for medical information for medical care and medical finance. In the current US medical system, the demand for patient medical information extends far beyond the medical care givers. Third party bill payers, such as insurance firms and self-insuring firms have demands for patient information in order to authorize procedures. One approach to private medical records is to take the current medical record information flows as desirable and try to regulate the flow of medical patient information through cryptography and authorized access.

The objective of this paper is to propose an alternative approach to privacy of medical records. We propose a redesign of the US medical system that promotes economic efficient delivery of medical services with no labeled patient information flows beyond the immediate care givers. However, to achieve economic efficiency, the proposed design would require flows of unlabeled patient information to medical researchers in order to carefully analyze medical performance. We assume that liberals and conservatives would accept the proposed compromise between individual risk and pooling.



Fred Norman
Wed Dec 16 15:46:27 CST 1998