| Abstract: |
Existing research documents that consumers frequently make mistakes in health
insurance markets, leading to price distortions and inefficient resource
allocation. However, less attention is paid to how such mistakes contribute to
health inequality, particularly when economically disadvantaged populations
are more likely to make poor decisions. This study examines the distribution
of choice quality in the Swiss health insurance market, using two sets of
administrative linked survey data. We find that economically disadvantaged
populations-those with lower incomes and less educationare significantly more
likely to choose higher-coverage plans that are suboptimal given their health
risks. Specifically, 49 percent of the population chooses plans that result in
financial losses, with average foregone savings ranging from CHF 382 to CHF
457 annually. These suboptimal choices contribute to widening disparities in
financial wellbeing. |