If you have to trust the government on this anyway, cutting private insurers out seems to be minimizing risk, no?
The government plays almost no role in keeping most health data confidential, since most PHI is held by private entities.
And it's not like the government has a great track record of what little PHI it is responsible for - there have been plenty of breaches against CMS and Medicare affecting large numbers of patients.
Why would for-profit companies keep the data confidential when they can make more money selling it?
The fact that the government has passed a law that requires private entities to keep PHI confidential says nothing about their competence in managing PHI of their own. The original claim is about the latter.