IT IS ONLY a preliminary OMB proposal, but any suggestion that St. Elizabeths Hospital be closed deserves quick rebuttal. The psychiatric hospital is the city's primary mental health facility, providing a range of services to approximately 5,000 patients that is not to be found in any other city institution. Where such services are available separately in the District, they would be overwhelmed by the St. Elizabeths population if the hospital were suddenly closed. The question, then, is not whether to close St. Elizabeths but rather how to reduce fairly the federal responsibility for the hospital.

One notion is to transfer the hospital completely to the District government. But this runs head-on into the problem of financing. All but $20 million of the hospital's $120 million budget is supplied by the federal government. The District government, still fighting its own budget problems, does not have the means to pick up $100 million worth of responsibility. This is not to say that the District has not been working with St. Elizabeths to take on more of the responsibility for mental health care for city residents. The city has established community mental health centers and is promoting the idea of outpatient care. Some 3,100 of St. Elizabeths 5,000 patients are outpatients. But budget problems have forced a cutback in the number of outpatient facilities, and outpatient care, no matter how good, will not provide for the approximately 2,000 patients in need of full-time institutionalization. To close St. Elizabeths and force those people to seek care that is not available here would be unconscionable.

The most sensible proposal is to create a public corporation to run the hospital. This plan was first suggested in the 1960s but was rejected as impractical since the city then lacked an elected government with local authority. As it is now proposed, the federal government would continue to finance the hospital, with the District government reimbursing the federal government for care of city residents until local payments reached a pre-set ceiling. That ceiling would increase yearly, with the goal of having the city pay for most of the hospital's funding. The hospital would also be allowed for the first time to seek direct payments from patients and to collect full Medicaid and Medicare benefits. Currently, the hospital can seek only limited Medicare payments. Policy for the hospital would be set by a board that would include representatives of the federal and District governments.

This plan deserves to be put into effect. While it will not remove a $100 million burden from the federal budget, as the OMB proposal to close the hospital would, the public corporation would reduce the size of the federal funding without also allowing the federal government to abandon its responsibility to the city.