You won’t see this guy, Paul Fronstin from EBRI on the CDHP rah-rah circuit. But like many sober analysts of health care, what he has to say is very important and very sharp. So go read A Conversation with Paul Fronstin in Managed Care magazine. If you’re too lazy/bored/time-constrained to do that, ponder at least this exchange which I don’t agree with—in that I think he’s not factoring in the outsourcing revolution—but is a pretty provocative viewpoint.
FRONSTIN: In the short term, I don’t see a tremendous erosion of coverage. One thing that people outside of health care tend to forget is the impact of the overall economy on health care. In the late ’90s, the strong economy enabled the managed care backlash. The lower unemployment rate drove employers to enhance benefits and drove small employers to offer benefits. Once unemployment drops below a certain threshold, the economy starts to have an impact on what employers do and don’t do. The likelihood that a small business offered health benefits increased 20 percent between 1998 and 2000, even though small businesses saw almost a 20 percent increase in premiums over those two years. That tells me that employers will do what they have to do to recruit and retain workers if they think it will affect the success of their business. Even if health care costs are increasing rapidly, if employers think cutting back on those benefits will affect their business, they’ll make other tradeoffs but they’ll maintain health benefits.MC: You see indications that we’re heading for another period like the late ’90s?FRONSTIN: Right now, we’re at 4.8 percent unemployment. The economy is certainly moving in the right direction as far as unemployment is concerned. We’re not that far away from that threshold. I don’t know if the threshold is 4.6 percent, 4.4 percent, 4.2 percent or 4 percent, but we’re within a percentage point of it as opposed to being within 3 percentage points. If unemployment continues down that path, employers will postpone abandoning health insurance