Earlier quoted context omitted.
I never heard this before. Can you explain how it protects insurance companies?
Insurance companies have incentives to get better data than their competitors, so they can offer less expensive coverage to lower risk people and leave the competing insurance companies with all the higher risk people. Until the competitors do the same thing. Then you're all just offering less expensive coverage to most of your customers and making less money. (That also tends to cause trouble for higher risk patient…
It was created primarily to modernize the flow of healthcare information, stipulate how Personally Identifiable Information maintained by the healthcare and healthcare insurance industries should be protected from fraud and theft, and address limitations on healthcare insurance coverage.
Is the protected from fraud and theft part somehow incorrect?
https://en.wikipedia.org/wiki/Health_Insurance_Portability_a...