Yes, I have heard about this. It isn't new. They started this way back in 1997 as a way of solving the problem of identifying elderly people with memory loss. The reasoning behind it's inception was to increase quality of care. The faster a doctor can identify a patient, the faster they can pull their patient record to see what they medical history is, whether they are allergic to any medications, ect.
If no family can be located, I think they have the right to install the chip. I am not saying it isn't an invasion of privacy, but it does serve a legitimate purpose.