A qualitative assessment of previous efforts to contain hospital costs.

Abstract

In April 1977, the Administration's Hospital Cost Containment Act was introduced in the House of Representatives and the Senate. Reaction to the proposal on the part of the hospital industry was immediate and generally negative. The congressional response has consumed over a year's time, partly due to the complexity of many details incorporated in the proposal plus concern that its provisions were inequitable or inappropriately focused. Alternative proposals were introduced which led to a further compounding of the difficulties faced by Congress, and a further lengthening of the process. This paper provides information which places current activities surrounding the debate over the Hospital Cost Containment Act of 1977 in historical perspective, and analyzes previous major attempts to contain the rising costs of hospital care. These attempts are described in three general categories: (1) controls on reimbursement; (2) controls on the supply of facilities; and (3) controls on utilization. Events surrounding them reveal that any effort to constrict the flow of resources to the health care industry will engender serious opposition. In addition, there are serious problems in defining health care needs and reasonable levels of reimbursement. These problems, coupled with society's general opposition to centralized planning and control, portend little success for centralized techniques in the foreseeable future.