Check Engine light is on - 1998 Dodge Caravan?

P0420 is a generic OBDII code for "Catalytic Converter Efficiency" Normally if just the P0420 code is present then the O2 sensors are working and there is no need to replace them. If there are no other codes present the code does lead you to believe that the cat/con is weak and cannot cleanup the exhaust enough before it reaches the rear O2. Since the drivability is not affected and I assume no other codes are present, I would suspect that the cat/con needs replacing.

Hard to say with certainty unless you map the data stream from the O2 sensor. Computer codes are a great reference for where to look for the problem, but sometimes do not give you the answer.

Replacing the O2 sensor may help, unless the catalytic converter plating is worn off. In this case, the catalytic converter would need to be replaced, If you do not have access to a scan tool where you can read live data, the O2 sensor would be my first try.

If you replace the O2 sensor, use an OEM type sensor with the correct connector. Avoid using the universal type (though they are less costly, they are certainly cheaper).