Boris Kralj () (Ontario Medical Association) Jasmin Kantarevic () (Ontario Medical Association and IZA Bonn) Darrel Weinkauf () (Ontario Medical Association)
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Income cap or threshold systems rely on incentives that encourage physicians to limit medical expenditures, but little is known about how physicians respond to these incentives. Conceptually, the threshold system is to physicians what an income tax system is to taxpayers. We exploit this similarity to analyze the impact of a reform that changed what is included in the ‘taxable’ billings of physicians in Ontario, Canada. We find that for services that the reform turned from exempted to non-exempted, the reform had a strong, negative impact for physicians with billings above the minimum threshold and a negligible impact for physicians below the threshold. The reform had no impact on services that were nonexempted both before and after the reform. This response of physicians to the threshold reform resembles the expected response of taxpayers to a similar change in the income tax system.
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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number
1784.
Find related papers by JEL classification: I10 - Health, Education, and Welfare - - Health - - - General I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
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