The Problem With Percentages (Editorial)

Early last month, The New York Times dropped this bomb: “Health insurance companies around the country are seeking rate increases of 20 percent to 40 percent or more, saying their new customers under the Affordable Care Act turned out to be sicker than expected.”

The Arkansas Democrat-Gazette promptly reprinted the story in the top-right position on its Sunday front page. There it was in black and white: huge, miserable rate increases requested all over the country — 23 percent in Illinois, 25 percent in North Carolina, 36 percent in Tennessee, 54 percent in Minnesota.

The article didn’t make this clear: Increases of less than 10 percent hadn’t even been made public. Arkansas wasn’t mentioned because no carrier selling policies on the Obamacare exchange here requested a double-digit increase.

Last week, Insurance Commissioner Allen Kerr announced the rate changes for 2016, which top out at 7.15 percent. That’s the average increase that Arkansas Blue Cross & Blue Shield will be able to apply to individual policies sold through the exchange. Meanwhile, competing QualChoice policies will cost an average of 8.2 percent less next year.

Big numbers made for a technically accurate but deeply misleading story in The Times. But even knowing the approved changes isn’t very helpful. It is very easy to imagine a QualChoice plan that is more expensive even after an 8 percent discount than a Blue Cross plan even after a 7 percent increase.

It’s also easy to imagine that some plans were underpriced to begin with. Fifth-grade math tells us that a policy that cost $200 a month in Tennessee last year would still be cheaper after a 36 percent increase than a $300 Arkansas policy that is reduced by 8 percent.

Caution is required when numbers lack context.