Attention Please! Health Plan Choice and (In-)Attention

Tamara Bischof, Michael Gerfin and Tobias Mueller

Diskussionsschriften from Universitaet Bern, Departement Volkswirtschaft

Abstract: We study the role of inattention as a key source of inertia in health plan choices. Our structural model shows that more than 90% of the elderly in Switzerland are inattentive and thus stick to their previous plan. We estimate sizeable switching costs even conditional on attention explaining part of the observed choice persistence. Inattention leads to overspending and generates considerable welfare losses for most consumers. A policy simulation shows that eliminating financially dominated plans from the choice set yields welfare gains for two thirds of individuals.

Keywords: health plan choice; inertia; attention; switching costs; managed competition; elderly (search for similar items in EconPapers)
JEL-codes: D12 D90 G22 I13 J14 (search for similar items in EconPapers)
Date: 2021-08
New Economics Papers: this item is included in nep-age, nep-com, nep-dcm, nep-hea, nep-ias and nep-isf
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Persistent link: https://EconPapers.repec.org/RePEc:ube:dpvwib:dp2111

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