Why MNsure’s 4.5% ‘average’ rate increase tells us almost nothing about MNsure rates

To understand what’s going on with MNsure, we can appeal to dogs for enlightenment. 

Consider a world in which there are only four dog breeds: Border Collies, Huskies, Malamutes, and Utonagans (yes, there is such a thing). All Border Collies live for 17.2 years, all Huskies for 8.1 years, all Malamutes for 1.8 years (poor things), and Utonagans for negative 9.1 years (dying 9 years before they are born; best to overlook the metaphysical implications).

If we then compute the average lifespan, we’d find that the “average” dog lives to be 4.5 years. But does that 4.5-year average lifespan give you any meaningful information about how long your dog will live?

Not really. And what if there were altogether 22,000 dogs, but only 770 of them were Utonagans? Would that change things? Shouldn’t the life expectancy be adjusted according to the number of dogs in each breed?

Welcome to statistics.

If we switch from dogs to MNsure providers, the above scenario is part of what’s at issue in the debate over the recently announced increase in MNsure rates. Last week, MNsure providers — Blue Cross Blue Shield, HealthPartners, Medica, and UCare — and the Minnesota Department of Commerce reported the percentage changes in rates for 2015 as, respectively, increases of 17.2 percent, 8.1 percent, 1.8 percent; and a decrease of 9.1 percent.

The strict mathematical average of these four numbers is indeed 4.5 percent. But does that 4.5 percent number give any meaningful information about individual rate increase? It doesn’t, for the same reason the average lifespan didn’t tell us about how long your dog would live. Unless you are bundling coverage in equal amounts from these four providers, the increase in a person’s premium will not come close to a 4.5 percent increase.

The 4.5 percent number gets even more confusing when we consider that the provider with the lowest rates and the most private health plans in MNsure (with 60 percent of them), Preferred One, is leaving the program. The exclusion of Preferred One further skews the statistics, because any Preferred One consumer who either switches to one of the other providers or stays with Preferred One will have a much, er, healthier increase. (We won’t even mention that a HealthPartners spokesman said that he wasn’t sure how the Commerce Department arrived at the 8.1 percent figure.)

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A better measure of the increase is a weighted calculation. That is, the providers with more subscribers would have their increases given proportionally greater significance in computing the overall change. Of the four providers, Blue Cross Blue Shield has 55 percent of the remaining MNsure subscribers (or about 12,300 people); HealthPartners has 30 percent (6,800 people); Medica, an 11 percent share (2,500); and UCare a 3 percent share (770).

Using a weighted measure, the aggregate increase in revenue for these four providers — assuming no changes in the subscriber base — would be approximately 11.8 percent, which more accurately reflects the increase in premiums. But that 11.8 percent still doesn’t take into account the wild card of the 60 percent of MNsure subscribers orphaned after Preferred One jumped ship. 

The Commerce Department’s officially reported 4.5 percent increase, then, is a number that has little to do with the change in what any given MNsure subscriber will have to pay.

So the kerfuffle over the “true” measure of the MNsure rate increase is a wonderfully flexible plaything, a Crazy 8 ball that gives a different – and likely irrelevant – answer as many times as you spin it. (And let’s not forget the likelihood that increases for some MNsure subscribers will be offset by tax credits.) Perhaps the safest thing to say is: MNsure subscriber will almost certainly be paying more, in some cases not too much, in some cases more than not too much. 

David Brokken teaches math at the University of Minnesota. 

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Comments (17)

  1. Submitted by Mike Downing on 10/06/2014 - 02:05 pm.

    Are you surprised?

    Are you surprised that Gov Dayton is lieing about the true price increases in MNsure? President Obama, Senator Harry Reid & Senator Franklin as well as Rep Pelosi lied about the ACA, aka Obama care lied when we were told we could keep our plan, we could keep our doctors and an average family would save $2500/year. All were lies!

    Voters will learn about the true increase in MNsure after the November elections. Shame on Governor Dayron for lieing to MN voters just to be reelected.

  2. Submitted by John Edwards on 10/06/2014 - 02:14 pm.

    Are the rate increases that bad?

    What possible reason would the Commerce Department have for releasing such obviously confusing and highly misleading average rates? Hmm. I wonder. Is it possible that many people will receive double digit increases?

  3. Submitted by David Hanegraaf on 10/06/2014 - 04:36 pm.

    Without MnSure

    Just think how high those increases would have been without MNSURE. Probably 25 percent like pre ACA,

  4. Submitted by Darrell Koehlinger on 10/06/2014 - 06:01 pm.

    Good Article

    This article raises a lot of good points. The biggest one made is that it is easy to play with numbers and paint a possibly misleading picture. It would seem to me that the only way to make accurate comparison is to compare completely identical 2014 MnSure policies to 2015 ones in terms of deductibles, coverage networks, etc. Any policy in one year that didn’t have a companion one in the other year should not be considered in the calculation.

    It would probably drive someone to insanity to attempt that type of statistical purity without even considering the relative popularity of the different policies or the absence of Preferred One on the exchange in 2015.

    It’s easier to resort to quick math on the most primary level, which is exactly what was done.

  5. Submitted by Greg Kapphahn on 10/06/2014 - 06:25 pm.

    Brief Questions

    Who is David Brokken?

    How is he qualified to offer this kind of analysis?

    What connections does he have to organizations that might influence his perspective on this issue?

    Since talented statisticians can make a set of numbers say virtually anything they want,…

    especially in an area where most readers have precious little clue how to perform a similar analysis,…

    it seems to me this article and accompanying documentation,…

    i.e. the glaringly absent set of lines at the end of the article describing the author’s qualifications and associations,…

    does not provide us with enough information to determine whether we can regard Mr. Brokken as an authority who can be trusted to provide accurate analyses, even when they contradict his “true beliefs,”…

    or just another pundit with and axe to grind, posing as an expert while trying to baffle his audience with BS.

    • Submitted by Joseph Skar on 10/06/2014 - 09:35 pm.


      So you don’t disagree with the analysis, but you prefer to kill the messenger? I would assume if you have an issue with this analysis you would also have a issue with MNsure’s simplistic methodology for the rate disclosure? I’m sure Minnpost would welcome some in-depth substantiation of the 4.5% if you would like to post a rebuttal? I would be interested.

      • Submitted by Greg Kapphahn on 10/07/2014 - 07:09 am.

        I’m Not Qualified to Agree nor Disagree With This Analysis

        I do not have the knowledge of insurance underwriting standards, nor of the techniques of statistical analysis, nor the proper ways to compare various insurance plans that would enable me to make such an analysis.

        Do you?

        I did not attempt to “kill the messenger.” Asking for more information about who Mr. Brokken is, what his qualifications are, and what his associations are is only to ask for sufficient information to be able to more adequately judge whether he is a well-qualified, honest, statistician seeking to provide accurate information,…

        or a pharmaceutical rep telling my doctor “this new (and very expensive med) is much better than the older, generic med for treating a particular condition and, just between me and you, is good for all these off-label uses, too.”

      • Submitted by Jackson Cage on 10/07/2014 - 08:38 am.


        we’re trying to figure out what the message is? This srticle covers about 25% of the issue. How about also addressing health insurance outside of MNSure? Obviously, if the price of milk at my store goes up 4.5%, whether that angers me or not depends on how much it increased at all the other stores.Including that data might be a more complete picture. I’m left wondering why the suthor chose to ignore it?

    • Submitted by Michael Hess on 10/07/2014 - 07:00 am.


      The author is simply reporting the rate increases with more granularity than the state and the Governor did and pointing out that the average of averages isn’t helpful. There are no extensive qualifications required to do (pretty simple) math like this. The author doesn’t veer in to an ACA pro or con, or make any judgement about the appropriateness of the rate increases. Your reply suggests an unreasonable sensitivity around the topic as though anything that could be considered negative must be questioned. This article is pretty straightforward and non partisan as far as that goes especially for a troubled topic like the MN ACA Exchange.

    • Submitted by Dean Flory on 10/07/2014 - 10:53 am.


      Since when do journalists need qualifications to write an objective story about the math behind our state health care exchange rate increases?

      I have questions about the actual costs. What is the average increase in real dollars? I’m sure this is also a road to insanity given the variables. A 4.5% (or 8.1% using the Minnpost math) increase on $100 is a lot less than the same increase on $1,000. And what about how do our costs compare nationally? Aren’t we still the lowest?

      Wasn’t it also just reported by the US Department on Health and Human Services that Minnesota has the highest quality and lowest cost health care in the nation (http://nhqrnet.ahrq.gov/inhqrdr/state/select)? Sure it’s un-Minnesotan to brag, but I think it’s time we toot our horn for things that are working and stop arguing over math.

    • Submitted by Andrew Putz on 10/07/2014 - 11:02 am.

      Andy Putz here, MinnPost’s executive editor. David Brokken is a local writer who teaches math at the University of Minnesota. He has no affiliation with any of the organizations he mentions in the story. In fact, we asked him to write about the MNsure numbers. The “glaringly absent” lines at the end of the piece were simply a result of our haste, not of any attempt to withhold information about David’s qualifications. We’ve added that information to the end of the article, and we look forward to running more of David’s work in the future. 

  6. Submitted by Rachel Kahler on 10/06/2014 - 06:58 pm.


    Seems like a good time to switch providers. Good thing the exchange makes this much more feasible than before.

    • Submitted by Mark Kulda on 10/08/2014 - 12:04 pm.

      It was probably easier to switch providers before

      There’s really no difference in how easy it is to switch providers. The exchange has not made that easier. There were more providers and more choices before the ACA. The ACA makes it easier to compare plans on a little more of an apples to apples comparison because the benefit sets are standardized. But just because the exchange now exists doesn’t mean its easier to switch now. It’s as easy to switch now as it has always been.

      • Submitted by Rachel Kahler on 10/13/2014 - 09:21 am.

        Definition of “easier”

        I guess you could say that the actual ease of switching hasn’t changed. Except for the fact that you now don’t have to create your own spreadsheet and hunt down details–details that weren’t necessarily easy to find, let alone compare– before switching. It seems to me that being able to directly compare takes a lot of the work out of switching.

  7. Submitted by Thomas Swift on 10/07/2014 - 08:17 pm.

    The 4.5% figure doesn’t tell us much about MNSure hikes, but it says volumes about the people touting it as fact.

  8. Submitted by Thomas Swift on 10/08/2014 - 07:15 am.

    I am surprised it took so long for the underwriters to speak up.


    8 to 43%, with the majority being 17%. Wow.

  9. Submitted by Mike Downing on 10/12/2014 - 09:36 am.

    Vote DFL and then complain when the real rates come out…

    DFL voters will simply pull the DFL lever for Governor Dayton without questioning the real rate increases on MNsure. DFLers will then complain about insurance companies after Nov 4th when the rate increases are actually in the range of 12-20%.

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