Does Our President Understand Car Insurance?

Thanks to the Blog Prof for a video of our president that has to be seen to be believed. 

 Here is the transcript:

When I was young, just got out of college, I had to buy auto insurance. I had a beat-up old car. And I won’t name the name of the insurance company, but there was a company — let’s call it Acme Insurance in Illinois. And I was paying my premiums every month. After about six months I got rear-ended and I called up Acme and said, I’d like to see if I can get my car repaired, and they laughed at me over the phone because really this was set up not to actually provide insurance; what it was set up was to meet the legal requirements. But it really wasn’t serious insurance. Now, it’s one thing if you’ve got an old beat-up car that you can’t get fixed. It’s another thing if your kid is sick, or you’ve got breast cancer.

I can understand a young Obama not understanding the difference between Collision and Liability insurance. Such knowledge has to be learned. I remember some of the embarrassing moments of my youth. But this video is from the time he was president. He still does not seem to know the difference. Why did young Obama not chose collision? I am sure the expense was the reason. When you have an old car with a deductible, Collision insurance is usually not a good investment-especially if you do not have the money.

The parallel that Obama is drawing here tells us that he does not understand health Insurance either. If he wants people to get "serious" insurance that person will need to spend serious money to get it. If someone does not have the money, they do not have the money. Forcing the young to buy insurance will not work if they are going to get treatment anyway and the fine is less than the insurance. Such insurance is not a good choice for the young. Since anyone can have an accident, the young need catastrophic insurance with a high deductible.

Will Krugman's Prayer Help?The reason insurance companies want these young policy holders is that their rate of profit on them is much higher than older customers. This is the young subsidizing the old-sounds like Social Security.

This is the man deciding things for us as we approach the debt ceiling. God help us.