Brattle Principal and Presidential Professor of Health Economics at the University of Southern California Dr. Daniel McFadden has coauthored an article on consumers’ health plan choices in American Economic Review.

The study focuses on consumers’ choices made under Medicare Part D. Although optimal healthcare plans change over time, many consumers choose to remain with the same plan. The authors, who develop a panel data model, separate two sources of inertia – inattention to plan choice and switching costs – and find that inattention is an important source of inertia, but switching costs also play a role, particularly for low-acuity individuals.

The full article, “Inattention and Switching Costs as Sources of Inertia in Medicare Part D,” is available below.

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