Retirement and health plan choice

Abstract

Many consumers exhibit choice persistence, often sticking with suboptimal or dominated health plans. We analyze the effect of retirement on health plan choice using a fuzzy regression discontinuity design that exploits Switzerland's old-age pension legislation. Drawing on insurance claims data from 84,731 individuals aged 61 to 68 over the years 2006–2014, we find that retirement significantly increases switching from the standard model to managed care plans, which offer lower premiums but restrict access to specialist care. However, deductible choices remain largely unaffected, as retirees are no more likely to select the cost-minimizing deductible than their non-retired counterparts. We conclude that while retirement may encourage plan switching, many consumers still choose dominated options, underscoring the need for a richer policy framework that provides consumer guidance incorporating measures such as personalized information interventions and simplified choice architectures to promote better health plan choices.