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

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