Obamacare Isn't Really Taking Away Jobs: Cleveland Clinic Edition

As the clock ticks down to full implementation of the Affordable Care Act, a trickle of stories about job losses related to the law has turned into a steady flow. Over the weekend, the story was that Emory Healthcare was axing 100 jobs in response — an explanation that turned out not to be true.

It didn't take a long time for another example of hospitals cutting back in the face of Obamacare to pop up, though. On Wednesday, the Cleveland Clinic announced it would cut its budget and staff. Here's how Reuters reported the news:

The world-renowned Cleveland Clinic said on Wednesday it would cut jobs and slash five to six percent of its $6 billion annual budget to prepare for President Barack Obama's health reforms.

The clinic, which has treated celebrities and world leaders ... did not say how many of its 44,000 employees would be laid off. But a spokeswoman said that $330 million would be cut from its annual budget.

Later on, the story quoted Eileen Sheil, the clinic's Executive Director of Corporate Communications, saying, "We know we are going to be reimbursed less" under Medicaid.

That explanation seemed questionable, because the cost reductions to Medicaid in the ACA are much smaller than reductions to Medicare — the government will reimburse providers less for giving care to Medicare patients than before. While the mechanisms aimed at providing universal insurance have gotten more attention, this is part of the law's other goal: an attempt to "bend the cost curve" (administration-speak for slowing the growth of health-care spending) in the law. During the 2012 presidential campaign, the Romney campaign attacked Obama for cutting Medicare, though the administration says patients should receive the same care; will just be paid less for it.

In fact, the "Obamacare is killing jobs" story isn't really accurate. It's not totally false — the Cleveland Clinic will in fact take in less money because of the law — but it's a more complicated story about changes in medicine. When I reached Sheil on Thursday, she seemed a bit confused by the emphasis on Obamacare in reports. "We've been working on reducing costs for years," she said.

"We felt health-care reform was absolutely necessary," Sheil said. "This is the new normal. This is where hospitals have to focus to be viable in the long run. This is not doomsday for the clinic. We're still growing — we're still hiring. The hardest thing is when it affects people."

Actually, much of what the Cleveland Clinic system is doing follows the recommendations of health-care analysts closely. For example, it has consolidated closely located neonatal intensive care units, because high volumes tend to lead to better results. It's working to reduce the number of procedures its staff performs, since in the current system "physicians are rewarded to do more, not to do the right thing for the patient," as Sheil put it. And there's a new focus on chronic diseases, which are an increasingly important and costly area for treatment.

Think of it this way: These are all steps that the Cleveland Clinic was likely to take, but Obamacare implementation is acting as a catalyst, spurring the clinic to adopt them now rather than on a slower timeline.

This isn't to absolve the ACA of any role in the cuts at all. The revenue reduction because of the law is real. Pretty much everyone agrees that the spiraling costs of health care in the U.S. threaten — through Medicaid and Medicare — the nation's long-term fiscal health.

Changes like what the clinic is doing, and the reduced reimbursements, do reduce costs. But of course the flip side of "costs" is "revenue." The end result may not be zero-sum — there's good reason to think lower medical costs would be good for the economy and the deficit in the long term — it will mean reshuffling at providers like the Cleveland Clinic in the short term. Whether you think that's a good idea probably has a lot to do with your political outlook — and also with whether you happen to be, say a doctor or an uninsured person.