Thanks for the correction; I agree that we were referring to the same basic trade-off. The existence of such a number would seem to mean that it comes down to routine cost control.

I think I very carefully said: “The trade-off they are given is usually about being subject to increasingly harsh regimes that control routine costs.” Now you seem to think that this decision primarily effects emergency care. I disagree*, but I certainly wasn’t saying that there weren’t options. I was referring to precisely the choice you mention.

• In my experience, when the plan puts a price differential on in-network providers, there is a number that you call at the time of the emergency admission that eliminates the cost factor in that circumstance. The purpose of the number is to identify to the insurance company the emergency nature and have them sign-off on it–lest you sue later on for ambiguity.

Also, it’s not always true that employee health insurance doesn’t come with options. In my case, I have a choice between two plans that differ significantly in the coverage of out-of-network expenses. The cost difference is around $100/month. Since I’m fairly healthy, and assumed I would have no trouble picking in-network care, I went for the cheap one.

I’d argue that the major actuarial difference between the two plans relates to emergency care, not routine care. It’s easy to choose an in-network primary care doctor, and not so easy to pick which hospital you end up at in an emergency. As it happens, a few weeks after I made this choice I had to get to a hospital quickly. Happily I ended up at an in-network hospital, though apparently we weren’t sure of that when we picked it.

I’d say this option is essentially a penalty on people who expect to need frequent emergency care. Admittedly, it’s a penalty that calls for one of the world’s smallest violins given the salaries of these particular “victims”, but I imagine similar issues apply at other companies.

Certainly this benefit has risk mitigation properties: much like a defined benefit pension plan does; but employees are not offered a trade-off between risk mitigation (health care) and risk taking (more $$$). No, the trade-off they are given is usually about being subject to increasingly harsh regimes that control routine costs.

I like the part where they hypothesize that one of the reasons this hasn’t destroyed the insurance industry already is that insurance is so messy and complicated. I think that’s exactly right: if choosing between different insurance policies is confusing, it isn’t practical for individuals to carefully optimize their policy choices and thereby destroy the insurance industry.

Unfortunately there’s no permalink to that episode but you can dig it up via http://www.npr.org/rss/podcast.php?id=510289