WASHINGTON--Last month, Sens. Edward Kennedy, D-Mass., and Patrick Leahy, D-Vt., introduced a bill that would create new privacy safeguards for patients' protected health information that, if enacted, could have a big impact on how providers work with patient data.

The bill, called the Health Information Privacy and Security Act of 2007, would create tighter HIPAA rules, giving patients the power to decide when, and to whom, their health information is disclosed.

"In America today, if you have a health record, you have a health privacy problem," said Leahy. "The ability to easily access health information electronically--often by the click of a mouse, or a few key strokes on a computer--can be useful in providing more cost-effective health care, but it can also lead to a loss of personal privacy."

The legislation is the latest in the ongoing saga of health information technology, which many see as crucial in controlling spiraling health care costs. Earlier this year, a CMS Office of the Actuary report predicted that health care expenses would double by 2016, reaching $4.1 trillion, or $1 of every $5 spent in the U.S.

"America's per capita health spending is the highest in the world," HHS Secretary Mike Leavitt said regarding the findings. "[T]here is simply no place on the economic leader board for a nation that spends a fifth of its domestic product on health care."

The potential for IT to make the U.S. health industry more efficient and less prone to medical errors has been touted by supporters for years. Nonprofit think tank Rand Corp. has predicted that the country's health care system could save more than $81 billion a year, as well as improve the quality of care, if computerized medical records were widely adopted. Leavitt has said that a standardized health IT system is key to improving care and lowering costs, and is "pivotal" in "transforming our health care system."

President Bush has set a goal for most Americans to have electronic health records, reiterating in his State of the Union address this year his goal of reducing costs and medical errors by improving health IT.

However, privacy concerns--along with those of system interoperability, physician reluctance, provider licensing, implementation costs and possible liabilities--have emerged as obstacles to the implementation of a widespread, unified health IT system.

A study by the California HealthCare Foundation, an independent philanthropy, found that 67 percent of Americans are highly concerned about the privacy of their personal health information. The study also found that consumers are more trustworthy of information stored in paper files than in electronic records: 66 percent think the former is more secure.

But the survey also found that, despite those concerns, consumers have a positive view of health IT and are "willing to share their personal health data when it offers a benefit, such as improving the coordination or safety of their care." Sixty-five percent of those surveyed acknowledged that computerization could possibly cut down on medical errors.

Advocates say shared electronic records have the potential to support consumers and manage patient care more effectively across settings from homes to physicians' offices and hospitals. Still, the road to that kind of secure interoperability is anything but smooth.

A study released Aug. 9 by RTI International and HHS found that, while EHRs could save money and reduce fraud and inadvertent errors in medical billing, current technology and performance standards don't measure up to the task. The study team recommended 14 requirements to health industry leaders for more secure EHR systems.

And on Wednesday, the State Alliance for eHealth, a division of the National Governors Association, urged state legislators and other officials to standardize state privacy rules--while ensuring consumer protection--for exchanging electronic health information.

Meanwhile, in a statement about the privacy legislation he and Leahy introduced--and had spent 10 years working on--Kennedy said "a delicate balance must be struck.

"On one hand, we must allow the sharing of information necessary for effective health care. At the same time, however, we must protect Americans' right to have their health records and individual health information kept private. For too long, the balance has been tilted too far against patient privacy, and our bill is a needed effort to correct that imbalance."

The measure has been referred to the Committee on Health, Education, Labor and Pensions.