Why Did Americans Reject Compulsory Health Insurance after WWI? An Application of the Lifecycle Model

Table 1

Comparison of results, low earnings profile (𝜎=2,𝛽=0.997).

	Expected lifetime utility for
Initial wealth ($)	No insurance over lifetime	IOOF insurance for first year only	IOOF insurance for first 3 years only	IOOF; insurance for first 5 years only	IOOF; insurance for first 7 years only	IOOF; insurance for 40 years	AALL insurance; (4.0% premium)	AALL insurance; (2.6% premium)	AALL insurance; (2.1% premium)
0	−∞	6.0484	6.0487	6.0488	6.0488	6.0481	6.0206	6.0420	6.0495
2	3.9284	6.0488	6.0491	6.0491	6.0491	6.0484	6.0209	6.0423	6.0497
4	6.0129	6.0492	6.0494	6.0495	6.0495	6.0488	6.0212	6.0425	6.0500
6	6.0420	6.0495	6.0498	6.0498	6.0498	6.0491	6.0215	6.0428	6.0503
8	6.0458	6.0499	6.0501	6.0501	6.0501	6.0495	6.0218	6.0431	6.0505
10	6.0473	6.0502	6.0504	6.0505	6.0505	6.0498	6.0220	6.0433	6.0508
22	6.0513	6.0521	6.0522	6.0523	6.0523	6.0516	6.0236	6.0449	6.0523
44	6.0552	6.0553	6.0553	6.0553	6.0553	6.0546	6.0264	6.0475	6.0550
46	6.0555	6.0555	6.0555	6.0555	6.0555	6.0548	6.0266	6.0478	6.0552
48	6.0558	6.0558	6.0558	6.0558	6.0558	6.0551	6.0269	6.0480	6.0554
50	6.0561	6.0561	6.0560	6.0560	6.0560	6.0554	6.0271	6.0483	6.0557
120	6.0651	6.0648	6.0643	6.0642	6.0642	6.0635	6.0351	6.0560	6.0634

Note: values in boldface show the highest expected lifetime utility for a given value of initial wealth across the given insurance options.