* Health and Human Services to look at changes to a privacy rule
* Some states say rule prevents sharing mental health data
* Barrier leaves holes in background check system for gun sales
President Barack Obama, moving swiftly after the U.S. Senate rejected a measure to expand background checks for gun buyers, acted on Friday to patch holes in the existing database dealers use to ensure they are not selling weapons to criminals or the mentally ill.
The Health and Human Services Department will issue a formal proposal on Friday to make sure one of its privacy laws does not prevent states from reporting information to the background check system.
"While this background check system is the most efficient and effective way to keep guns out of the hands of dangerous individuals, it is only as effective as the information that is available to it," an administration official said.
Obama was visibly frustrated after the Senate on Wednesday defeated a bill that would have expanded background checks for guns bought at gun shows and on the Internet.
"Even without Congress, my administration will keep doing everything it can to protect more of our communities," Obama said on Wednesday.
"We're going to address the barriers that prevent states from participating in the existing background check system," he said. The idea was part of a series of executive actions Obama first announced in January.
Health and Human Services will ask for public comment on how the Health Insurance Portability and Accountability Act's privacy rule prevents some state agencies from reporting data to the background check system, and how best to remove those barriers.
The rule allows hospitals and agencies to disclose data when it is required by law, but some states did not have explicit laws requiring state agencies to share data from mental health records, said a report last year by the Government Accountability Office, a federal government watchdog.
The GAO found that 17 states had provided very few records to the National Instant Criminal Background Check System.
The privacy rule was one issue, but technology problems and limited staff resources were also identified as barriers.