CEO's Blog

Good morning!

In an interview aired today with C-SPAN host Steve Scully, President Obama made a rather startling admission: the U.S. has run out of money. Of course, this isn’t really surprising to anyone with a passing knowledge of the state of U.S. finances. But it is nevertheless shocking words to be coming from a sitting president, and one that could further roil global markets in the days and weeks ahead.

A brief excerpt is below (emphasis added):

SCULLY: Yet, it all takes money. You know the numbers, $1.7 trillion debt, a national deficit of $11 trillion. At what point do we run out of money?

OBAMA: Well, we are out of money now. We are operating in deep deficits, not caused by any decisions we've made on health care so far. This is a consequence of the crisis that we've seen and in fact our failure to make some good decisions on health care over the last several decades.
So we've got a short-term problem, which is we had to spend a lot of money to salvage our financial system, we had to deal with the auto companies, a huge recession which drains tax revenue at the same time it's putting more pressure on governments to provide unemployment insurance or make sure that food stamps are available for people who have been laid off.
So we have a short-term problem and we also have a long-term problem. The short-term problem is dwarfed by the long-term problem. And the long-term problem is Medicaid and Medicare. If we don't reduce long-term health care inflation substantially, we can't get control of the deficit.
So, one option is just to do nothing. We say, well, it's too expensive for us to make some short-term investments in health care. We can't afford it. We've got this big deficit. Let's just keep the health care system that we've got now.
Along that trajectory, we will see health care cost as an overall share of our federal spending grow and grow and grow and grow until essentially it consumes everything. That's the wrong option.
I think the right option is to say, where are the game changers, the investments that we can make now that are going to reduce costs, even if they don't reduce them this year or next year, but 10 years from now or 20 years from now, we are going to see substantially lower costs.

A transcript of the full interview may be downloaded here.

My take is that this is a trial balloon floated on the Memorial Day long weekend (when relatively few viewers will have seen the Obama interview), perhaps to gauge reaction to this frank assessment of the seriousness of U.S. finances. The interview suggests the Obama administration will target healthcare cost reductions as part of its strategy for tackling the soaring debt. But even more interesting is Obama's willingness to find the "game changers", which could be interpreted to mean new disruptive technologies, like Picomole's LifeSens breath analysis technology.

As I've stated here before, the key to reducing healthcare costs while improving clinical outcomes is to shift the focus from crisis care to preventative care and early detection. Sounds to me like President Obama may be prepared to consider just that.

Yours truly,
John