Inflation in health care costs remains unacceptably high. Throughout my
Administration, legislation to reduce health care cost inflation was one of
my highest priorities, but was not passed by the Congress. Therefore, my FY
1982 budget proposes sharing the responsibility for health care cost
control with the private sector, through voluntary hospital cost guidelines
and intensified monitoring. In the longer term, the health care
reimbursement system must be reformed. We must move away from inflationary
cost-based reimbursement and fee-for-service, and toward a system of
prospective reimbursement, under which health care providers would operate
within predetermined budgets. This reimbursement reform is essential to
ultimately control inflation in health care costs, and will be a
significant challenge to the new Congress.