Conversations With Perry and Friends: Paul Fronstin, Ph.D.

Although Medicaid and Medicare dominate healthcare policy discussions and debate and research, about two-thirds of the people in the U.S. get health insurance coverage through their employer, notes Perry Cohen, Pharm.D., CEO of The Pharmacy Group and a longtime member of the Managed Healthcare Executive (MHE) editorial board.

Perry Cohen, Pharm.D.

In this episode of his “Conversations With Perry and Friends” podcast, Cohen spoke with Paul Fronstin, Ph.D., one of the country’s foremost experts on employee healthcare benefits. Fronstin is director of health benefits research at the Employee Benefit Research Institute (EBRI), a Washington, D.C.-based research organization supported by employers, insurers and retirement services companies.

In a wide-ranging conversation, Cohen and Fronstin discussed self-insurance, pharmacy benefit managers, glucagon-like peptide 1 (GLP-1) drugs, and healthcare costs. Although the focus has been on possible Medicaid cuts, Fronstin said to keep an eye on tax treatment of healthcare benefits as Congress and the Trump administration wrestle with 2026 tax and spending legislation. He noted that the first Trump administration came out with a rule that made it easier for employers to start individual coverage health reimbursement arrangements (ICHRAs) and that ICHRAs may again surface as a priority Fronstin described ICHRAs as a “fancy name” for employers giving workers money on a pretax basis to buy health insurance on their own.

Paul Fronstin, Ph.D.

Cohen and Fronstin talked about the long-term trend of rising U.S. healthcare costs. The “medical miracles of modern medicine,” such as sophisticated imaging and advanced pharmaceuticals, are contributing factors, Fronstin said, but he also quoted the Princeton healthcare economist Uwe Reinhardt’s famous dictum “it’s the prices, stupid” and referenced research by the Health Care Cost Institute that shows that healthcare utilization in the U.S. is not increasing.

“I think employers have figured out, through plan design, how to control increases in usage, but we’re spending more,” said Fronstin, a development that can be explained by rising prices.

And consolidation is one of the principal reasons for cost increase, he said.

“Hospitals have been buying up hospitals. They’ve been buying up physician practices. Physicians have been merging with other physician groups. Everyone in the supply chain of providing healthcare services is getting bigger, which gives them more negotiating power,” Fronstin said.

Cohen and Fronstin also discussed shifting healthcare costs and decisions onto employees. “The term 'skin in the game' has been used for at least 20 years, and I say that employers need to play a balanced role, because they could go too far in pushing workers to play Dr. Google,” Fronstin said. “So what could they do? They could be benefit design innovators. They could be the information gatekeeper and help people with care navigation services and decision support tools. They need to promote health literacy, not just literacy on navigating healthcare, but also navigating health plan choices. And they're also going to continue to be the catalyst for market change, especially the large purchasers.”

Fronstin said that while healthcare costs have risen, the proportions of who bears the burdens of those costs have not changed. “If you take the whole pie of what we spend on healthcare, employers and employees are basically paying the same-sized slice, but the pie is getting bigger, so it feels like people are paying more — and they might be, relative to their income —but they’re not paying more relative to the total size of the pie.”