You absolutely can store HIPAA data in the cloud.
Latency is one of the big selling points for Outposts. They have customers wanting to control industrial equipment from their cloud resources, but the nearest AWS region is too far away to provide the low latency connectivity they need. With Outposts, they get the cloud, but with on-prem network latency.
Bezos basically cut ties with Washington a few years ago and moved to FL, so I don’t see it as very likely that he’d be involved. Though he has previously expressed interest in an NFL team, so maybe…
I’d love to see a group put together a crowd-funded bid and move it to a Packers-like distributed ownership system. Seattle might be the place where something like that could happen.