From a survey of American households, we find that there is a significant subset of consumers that does not recognize that there are generally two components of health insurance: insulation against risk for catastrophic expenses, and pre-payment of more predictable expenses.  These consumers tend not to recognize the trade-off between employer benefits and salary, so that some younger consumers with lower expected health care costs overvalue employer-provided insurance.  We then argue that there is not a feasible way to model all consumers’ attitudes toward risk, if some simply do not perceive risk as an issue.  We also discuss institutional discouragement of risk-taking, such as tax advantages of employer-provided insurance, and conjecture that consumer preferences have evolved in relation to institutional incentives.