Wondering about divergent preferences

One of the fundamental differences between an economic libertarian approach to thinking about the world and a more pro-government approach is around the question of divergent preferences.  To what extent do different people actually (and properly) prefer different things?

I think it is not unreasonable that some folks would prefer to use their last $5000 for entertainment rather than health insurance, on the idea that the risk of a young person getting hurt for more than $1000 in a year is fairly low, and further mitigated by the idea that someone with insurance may be a little less careful than someone without.


Now there may be public costs to that choice, if we have overmuch public guaruntee of care.  But there is obviously to me some combination of risk/money/catastrophic insurance at which it is a BAD decision for any person to get normal health insurance.  It is also obvious (to me) that that threshold is different from person to person (within the constraints of externalities).

I think that if peoples preferences are significantly divergent, policies like a coverage mandate (as opposed to a catastrophic coverage mandate) become an obviously bad idea.  Is this not an obvious position, or am I too steeped in my libertarianism.