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Hospital Cost Containment Legislation Letter to the Members of the House of Representatives.

November 13, 1979

You will have an opportunity this week to help our fight against inflation by passing Hospital Cost Containment legislation that can save Americans more than $40 billion over the next five years. I urge you to join in this effort.

For more than two years, the Congress has been considering cost containment legislation. Many legitimate concerns have been raised by Members as well as by the hospital industry. Recently, the Ways and Means and Commerce Committees have approved legislation which responds to those concerns in a fair, reasonable and balanced way. The legislation which you will be voting on is not the same legislation that was proposed in the last Congress. And, thus, it is not the same legislation against which so many of the objections to cost containment have been directed.

The modifications which have now been made to the original cost containment bill minimize the Federal government's involvement and place the highest priority on voluntary actions by the hospitals:

• The bill recognizes the request for a priority voluntary effort initiated by the nation's hospitals two years ago. Only if the hospitals fail to meet their own voluntary national goal would the stand-by Federal program go into effect.

• The bill exempts states with successful cost containment programs. States which do not yet have such programs are provided specific incentives to establish and implement them.

• All small hospitals—those with less than 4,000 admissions a year—would be exempt from the bill's coverage.

• The bill will not result in new regulatory burdens on hospitals. Hospitals will have to provide only one additional line of information (wages for non-supervisory personnel) on the Medicare cost forms which they currently submit to the Federal 'government.

• The bill permits a complete pass-through of the increases in the price of goods and services that hospitals purchase. Thus, hospitals are not penalized because of inflation in the general economy.

• The stand-by Federal program cannot be put into effect over the objection of either House of Congress.

• The bill contains a sunset provision to limit the program to a maximum of five years.

This modified cost containment legislation will have a significant impact in reducing the hospital industry's inflation rate, which over the past decade has increased twice as fast as the inflation rate in the overall economy. Hospital inflation has been at such high levels because of a lack of competition within. the industry. Without the type of consumer marketplace which exists in other sectors of the economy, hospitals generally have no incentive to reduce waste or inefficiency and to curb costs. The Federal government itself now contributes 40% to all hospital costs and has an obligation to the American people to assure that Federal tax dollars are not wasted.

While ensuring continued high-quality care, the legislation before you can bring efficiency and businesslike practices to the hospital industry. And it can do so with a minimum of Federal involvement and red tape.

Of equal importance, no other bill before the Congress will have such a direct effect on reducing the cost of living for all Americans. A vote for this bill will clearly and properly be seen by the public as a vote to reduce inflation. It will also be seen as a measure of Congress's commitment in working to fight inflation.

We cannot now afford to turn our backs on the solution developed by two House Committees after several years of difficult work. The time for delay and additional study is past. The time for positive action against inflation is now. I urge you to take that action by voting for Hospital Cost Containment legislation.



Note: This is the text of identical letters addressed to each Member of the House of Representatives.

Jimmy Carter, Hospital Cost Containment Legislation Letter to the Members of the House of Representatives. Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/248874

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