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Rostenkowski's compromise:
complete but unpopular

DID Dan Rostenkowski anesthetize President Carter's hospital cost control paln? or Or did Rostenkowski neatly graft Carter's plan onto a competing idea to control] the rapidly rising cost of hospital — leaving both sides unhappy, but also leaving the Congress with a live bil which addresses the issue?

On the surface, it would appear that the Chicago Democrat's House Ways and Means' health subcommittee Carried out plan extensive surgery on Carter's plan limit the hike in hospital costs to nine per cent per year. The bill which emerged from committee greatly resembles a much weaker voluntary hospital cost control plan authored by the American Hospital Association (AHA).

Rostenkowski endorsed the AHA plan in a February 1 speech to the group in Chicago. And it is the AHA plan which is the basis for the first half of the health subcommittee's hospital cost control bill.

The AHA doesn't like the bill, and the association feels it has been crossed by Rostenkowski. But the AHA can't say so, because the bill includes its plan. But the bill also includes the tougher Carter plan, which angers the AHA.

However, the Carter plan takes a back seat in the Rostenkowski bill to the AHA plan for controlling hospital costs, so the administration doesn't exactly welcome Rostenkowski as the kindly general practitioner who can cure all ills.

The Chicago representative is also close to the health industry. His February 1 speech praised the AHA for its "voluntary national mechanism" to control hospital costs. The AHA's voluntary plan hasn't been implemented yet.

The voluntary plan would encourage AHA member hospitals to "reduce the rate of increase in hospital costs by two per cent this year and an additional two per cent next year," Rostenkowski said. "If the industry is able to achieve this goal ... no federal regulatory program should be put into effect," he told the AHA. In short, the Chicago Democrat told the hospitals to cut their annual cost increases, from what congresisonal staffers claim was a 1977 level of 16 per cent, down to a 12 per cent hike in 1979.

The Bureau of Labor Statistics, which measures such things, says the 1977 increase was 10.4 per cent.

After praising the unimplemented AHA voluntary plan, Rostenkowski added that he had asked the committee staff to "redraft the bill to the specifications I have outlined."

Once the staff finished preparing the bill for surgery, the health subcommittee, under Rostenkowski's direction, started to operate. After shunting the Carter plan into a standby category — to be used only if voluntary measures fail — the panel grafted on enough exemptions and exceptions to the bill to weaken even the AHA idea.

Rostenkowski pointed out that the compromise combination of the two plans failed to satisfy both sides. If the voluntary price hike reduction doesn't work, then Carter's mandatory 9 per cent cap on the rise of hospital costs would take effect.

It was that provision which upset the AHA. The last thing the association wanted to see was their own plan written into law. Pushed to the wall, the AHA would choose to back the Carter plan. Both the association and Rostenkowski knew that further surgery to help the Carter plan was useless — it wouldn't survive on Capitol Hill.

And if no bill were passed, the AHA would have what it really preferred — no hospital cost controls at all.

But by writing the AHA plan into his bill, Rostenkowski has put the hospitals on the spot. He warned the AHA that its member institutions must slow the price rises, or else the Carter plan will come down on them before they know it. As if that didn't upset the AHA enough, the word on Capitol Hill is that Georgia Sen. Herman Talmadge, Rostenkowski's counterpart on the Senate Finance health subcommittee, favors Rostenkowski's idea of a mixed voluntary-federal approach.

By putting in the AHA plan and putting it first, Rostenkowski made the administration mad, though it finally grudgingly acquiesced to his scheme; by holding the Carter plan as a scalpel over the hospitals — and setting up the bill so that it conceivably could take effect in 1979 — Rostenkowski angered the AHA. But by fashioning the compromise, he got a workable bill. It was a magnificent operation.

One can't blame the AHA for its anger. As long as the Carter proposal was bogged down, the little pressure to control hospital costs came from the association's February speaker — Dan Rostenkowski.

In November 1977, Rostenkowski warned the hospitals of rising pressure for federal action in a speech made on the House floor. The AHA's tentative, voluntary cost-control plan was its response to that statement. And one week after his AHA address, Rostenkowski detailed his compromise in the Congressional Record.

What all of this legislative legerdemain conveniently overlooks is that under the AHA voluntary plan, the Rostenkowski compromise, the Carter plan or any idea anyone else comes up with, hospital costs will still go up, never down. There have yet to be any suggestions on how to accomplish that — though it is the one move that would most probably receive universal acclaim.

May 1978/ Illinois Issues/ 35


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