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

Table 3

Minimum wealth levels that would induce preference for self-insurance by age (𝜎=2, 𝛽=0.997, low earnings).

Age	Years at work	Median savings rates*	Estimated annual savings**	Versus IOOF plan for one more year	Versus IOOF plan to age 60 (multiple of annual savings)	Versus AALL plan with 4.0% wage premium to age 60	Versus AALL plan with 2.6% wage premium to age 60	Versus AALL plan with 2.1% wage premium to age 60
25	5	3.3%	$18	$60 (3.3)	$24 (1.3)	$6	$8	$40 (2.2)
30	10	3.8%	$23	$62 (2.7)	$22 (1.0)	$6	$8	$38 (1.7)
35	15	4.1%	$25	$66 (2.6)	$22 (0.9)	$6	$8	$44 (1.8)
40	20	4.0%	$25	$68 (2.7)	$24 (1.0)	$6	$12	$130 (5.2)
45	25	4.4%	$27	$64 (2.4)	$28 (1.0)	$6	$18	***
50	30	5.2%	$30	$62 (2.1)	$40 (1.3)	$8	$52 (1.7)	***
55	35	6.8%	$36	$60 (1.7)	$1,754 (49)	$10	***	***

* Median savings rates for 5-year age groups as reported in Emery [2], using the 1917–1919 US data, including zero surpluses with mortgage expenses. The median savings rate for those aged 20–24 (25–29) was used for the individual with 5 (10) years of work experience, and so forth.
**Average of previous 5 years labour income times the median savings rate for 5-year age groups.
***Wealth levels considered are in the range from 0 to $6,000. Self-insurance was not preferred to the given insurance plan at any wealth level in this range.