Hospital Cost Containment Remarks at a White House Briefing on the Proposed Legislation.

How many of you think we need to pass hospital cost containment legislation? [Laughter] Would you raise your hand? How many of you will help us with it? Would you raise your hand? How many of you think we are going to win it? [Laughter and applause] You don't need me. [Laughter]

I think all of you know that one of the major responsibilities of a President is to detect problems that exist in our society and to try to marshal enough of an effort to correct those problems or to answer difficult questions that affect the wellbeing of our Nation. I don't know of any issue that is more important to me at this point than controlling inflation, because it not only impacts directly upon the quality of life of the people whom I represent and who also look to you for leadership, but growing inflation separates people, one from another. It drives wedges between us. And it arouses a distrust in the average American's mind about organized labor, about business, about the free enterprise system, about local, State, and Federal Government.

It's a very insidious thing. And as you know, for the last 10 years, inflation has been an ever-present problem for me and my predecessors, and for you and those who work with you.

It's hard to detect specific things that can be done. There's no way that I can affect the price of aluminum or wheat or lumber. It's almost impossible to have a direct impact on international markets. And quite often, or most often, I would say, the prices of commodities—barring some extreme shortage, or awareness of an existing shortage—the prices move up fairly well together.

Hospital treatment, medical treatment, is an exception to the rule. The laws of supply and demand, the free enterprise system principles don't work, because neither hospital owners or administrators or doctors or patients have a built-in incentive to try to control prices. Ninety percent of all the hospital bills are paid either by insurers or by the Government. And quite often, if a family has paid hospital insurance for 5 or 6 years and nobody gets sick, and someone does feel ill, their natural, human inclination is to go to the hospital and get part of their money back and, in the process, obviously be treated for a real or imagined illness.

It's much more easy for a medical doctor to put someone in the hospital for treatment and to keep them there, readily accessible, than it is to do otherwise. And quite often, the medical doctors are part owners of the hospitals themselves, and keeping extant beds occupied is one of the factors that go into the profit of the hospital operation itself.

The rate of increase of prices of hospital care has been extraordinarily high-in the last number of years, twice as great as the excessive inflation rate for society as a whole. And this indicates that something ought to be done.

As you well know, the hospital costs have been and are now doubling every ,5 years. And quite often, the price of hospital care doesn't show up just because a family has someone go for medical care personally. When you buy an automobile, on the average, $120 of the price of that car that you pay goes to buy hospital insurance for the workers who made the car. So, it feeds back into society and shows up in the Consumer Price Index, and therefore is compounded in its adverse effect on us all.

I'm a product of the free enterprise system. I served for years on a hospital authority. My uncle, my mother, my brother—all of us have been an integral part of the Sumter County Hospital Authority.

And I have seen in retrospect, from a little different perspective, that we were naturally inclined to buy a new machine whenever it became available and then to mandate, to require that every person who came to the hospital had to submit a blood sample or some other aspect of their body to the machine for analysis, whether they needed it or not, in order rapidly to defray the cost of the purchase of the machine. And I didn't realize then that I was ripping off people; never thought about it too much. [Laughter] But it was a fact back in the late fifties and early sixties. It's even more an important element of hospital care now than it was then.

Many of the machines obviously play a very real role in adequate health care. I don't want you to interpret my remarks as condemning hospital administrators or owners or doctors or patients or insurance companies. I think the fact is that we're all in it together. And many of the hospital administrators and medical doctors support this program enthusiastically. Many have already accomplished even more than the legislation envisions.

In New England, for instance, last year hospital costs went up about 8 1/2 percent. We now have nine States, as you know, that have mandatory cost containment legislation on the books. It's being administered well; it's worked well. The hospitals still prosper, and, of course, the patients and the medical care system have not suffered at all.

We've received extraordinarily broad support for this legislation—business, labor, consumers, local officials, State officials, the elderly—but we have a formidable lobbying group marshaled against us. And their concentrated effort on individual Members of Congress, in the commerce committee and otherwise, who have a special interest and a long-time friendship and allegiance—at least a knowledge of the lobbyists—is a very difficult obstacle to overcome. We were successful last year in the Senate. We were almost successful in the House.

We have redoubled our efforts, but the opposition has also redoubled their efforts. And the outcome of the struggle is certainly still in doubt.

It would not be enough for you merely to come here, to go back home and say, "I spent the afternoon at the White House; I met with the President," and use that as a conversation piece. You're welcome to do it if you wish— [laughter] but if you derive any gratification from it or any social escalation from it- [laughter] —I would like for you to compensate by actually personally and substantively helping to get this legislation passed.

Every one of you is a leader in your own right, and many people listen to your voice. You can help to shape public opinion at home. And more importantly, you can marshal, I'd say, benevolent influence on the Members of the Congress to let them know how much you care.

If you head up a business or a labor organization or a consumer organization, I hope that you will be personally responsible for marshaling the writing of a hundred or so letters or telegrams, or call every Member of the Congress with whom you are acquainted. I don't know of anything that you could do as an investment of time or effort that would pay richer dividends for you or for our country.

It's very difficult to get people to express themselves, because quite often it's a little embarrassing or it takes a little extra time. But I think if you would search in your own mind for the particular project that's of most interest to you—your own business or, perhaps, golf, or perhaps the collection of stamps, or whatever—and just see how much time you put in on it and then just allot a partial amount of time to this effort, I would be deeply grateful to you.

We have a partnership, whether we like it or not. I personally like it. I hope you do as well. We're partners in continuing an inflationary spiral that robs us all, or we can be partners in doing a tangible thing to help abbreviate the rate of increase of inflation and, perhaps, level it off and begin to bring it down.

I know you've received all the specific information about the legislation that you need—perhaps more than you want. But still I hope that you will carry from here not just the knowledge that you've derived but also a personal commitment to help by doing something about it.

I might close by saying this will save an awful lot of money—in the next 5 years, $53 billion; in the very stringent 1980 fiscal year budget, $1.4 billion.

And I might point out that this does not create any new agencies. It does not create any additional, costly reporting whatsoever. It's phased in in a very careful way by someone, your President, who is deeply committed to the principles of the American free enterprise system.

The first step is completely voluntary. Any hospital which voluntarily complies with the very moderate guidelines is not covered. Any hospital covered by a State program is not covered by any future Federal action. Only if both these steps are avoided does the Federal program come into effect.

So, I think you can see that it's carefully considered. It's been improved substantially over what we originally introduced last year, because we've learned a lot and we've not had a closed mind about it. We've listened to hospital owners, administrators, medical doctors, patient groups, and others.

I'm very proud that you would come here. It shows your interest. And I hope that your action after this meeting will make your trip here worthwhile. I believe we can win. And it'll be a great victory not only for you and for me but for our whole country.

Thank you very much.