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Every time this country goes to "war" civil liberties get eroded. It's a historical fact. Whether it was interning Japanese without any due process, or the "drug exception" to the Bill of Rights, or the Patriot Act ... it's all the same.
HIPAA was enacted before 9/11 and the Patriot Act, but it took a few years for its regulations to be issued and for the law to take effect. Before 9/11, HIPAA already had two broad exclusions for its medical privacy protections: 1) criminal investigations, and 2) national security.
There's a national security exception found in many laws that were enacted since the 1940s. It's nothing new. It all goes back to WWII and the Communist witch hunts of the McCarthy era and it lasted all through the Cold War. In the name of national security they can do almost anything they want ... especially these days. Back after Watergate and Nixon's abuses of power, the pendulum swung the other way and we got things like FOIA and the Privacy Act. The pendulum has now reversed.
So yes, the government (federal, state, and local) can get all your medical records if they say it's for a criminal investigation (of you, your doctor, pharmacy, or anyone).
And if they say it's for national security, the federal government can get anyone's records. If they get a FISA warrant, they can search your home in secret, and secretly install a bug on your computer.
They do not have to tell you that they have your records. If you do a Privacy Act request, they don't have to tell you that they have anything.
On the positive side, even with all that ... i don't know of any country that has better protections of civil rights than the U.S. How many countries have anything like our Bill of Rights? Few or none. Of the ones that have something like it, how many really follow their own laws?
If anyone knows a country with better protections than the U.S., please let us know.