This is the main reason I'm skeptical of central government databases. Not because of the miniscule chance of them enabling a police state, but because of the very great chance that the data will not be properly safeguarded.
Edited for spelling
FWIW, "eel case" aside, I know of clinicians being unceremoniously sacked for breaching patient privacy; and I know of NZ hospitals hiring staff to monitor the audit logs on a daily basis. It's a very big deal, and something that a lot of work is put into getting right.
Currently: facebook, telecommunication companies, Skype, gmail. Scary: Data aggregation services. Near future: face and iris databases.