Gruber and Poterba (1994) examine the Tax Reform Act of1986, which for the first time allowed the self-employed to deductthe cost of their health-insurance premiums. As the benefit of adeduction depends on an individual’s federal income tax (rate),the reform generated differential effective price changes amongthe self-employed. Their preferred estimates suggest elasticitiesaround −1. Their study is especially relevant to us as it exploitsa natural experiment in a context outside of employer-sponsoredplans. However, the preferences, constraints, and resources of theuninsured may not mirror those of the self-employed