It was bound to happen, a major deomestic program area where the Carter administation in its final days took a strong step toward cutting unneeded government spending and -- you guessed it -- the Reagan people now are reversing that decision.

The issue is relatively simple. Do we spend more federal money to build hospitals in areas where everyone agrees there already are too many unused hospital beds?

The Carter administration, as part of its effort to contain medical expenditures, published an Office of Management and Budget policy memorandum in the Dec. 19, 1980, Federal Register (page 83701).

The memo declared that no new federal hospitals would be built in "overbedded areas," without the agency involved first trying to buy or lease "suitable, existing, nonfederal facilities" at a reasonable price.

"No federal grants, loans, loan subsidies or loan guarantees" would be made available for nonfederal hospital construction or enovation, the memo stated, without a determination by the secretary of health and human services that "it is necessary" or that it was part of an approved local hospital facility plan.

The Carter plan went even further, promising to seek legilsation that would change Medicare and Medicaid reimbursement policies in cases of unneeded hospital construction and even revise federal tax exempt bond financing for hospital construction where there already were too many beds.

The Carter approach, it was argued, would cut down on cost and provide facilities, where needed, quicker, since they would not have to await new construction.

The Defense Department and Veterans Administration, both of which were looking to build new hospitals, were unhappy with the Carter approach.

However, both were forced by the Dec. 19 OMB memo to begin looking at suitable, existing hospitals -- the VA in Mineapolis where it wanted to replace its old VA hospital but where there is substantial overbedding, and DOD in San Diego, where the Navy wants to build a new facility in Balboa Park, much to the unhappiness of the city, which also has an excess of hospital space.

The Carter-instituted, new approach may be undone by a one-sentence notice in the Feb. 20, Feferal Register (page 13439).

"This memorandum rescinds" the earlier OMB hospital construction memo, says the notice, and with it the official restrictions of the Carter plan.


One OMB official said the Reagan people were trying to cut down on paperwork created by the Carter policy.

They also were cutting out the health planning organizations that were part of the Carter approach, and felt that with other cuts in agency budgets, none of the 10 federal departments that are authorized to build hospitals would have the money to do it.

The VA and DOD, however, were not hit by the Reagan cuts, so we will just have to wait and see what happens to their hospital plans.