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Abstract.  We examine a reform to the physician threshold system in Ontario that provides a unique opportunity to assess the effect of fee changes on physician behaviour, free from the biases that potentially affect simple time‐series or cross‐section inference. We find that: (1) the income effects of fee changes are small, but significant; (2) the income effect dominates the substitution effect only for a minority of services with relatively low prices and high volumes; and (3) the cross effects of fee changes tend to be significant only for services with relatively high prices and low volumes.

Though a few studies are available with regard to socio-economic differentials in health care utilisation in India, no attempt has been made to understand the underlying decision-making process in health care utilisation. Therefore, in this article, an attempt is made to examine the utilisation of inpatient care in India, focusing on the socio-economic determinants of the extent of inpatient care use. The health care utilisation model adopted by Manning et al., (1987, American Economic Review, 77(3), 251–77), and Pohlmeier and Ulrich (1995, The Journal of Human Resources, 30(2), 339–61) was employed for studying the above objective. Cross-sectional data are taken from National Sample Survey Organization's 60th round (2004) survey on 'morbidity and health care'. While a two-part (double-hurdle) model is estimated for the frequency of hospitalisations, a zero-truncated negative binomial regression model is applied for the length of stay (LOS) in a hospital. The results suggest that controlling other factors, people from richer households were more likely to seek hospital admission and use inpatient care more frequently than their poorer counterparts, consistent with the supposition that rich people have greater access to health care. However, the analyses suggest that with respect to income, equity has been achieved for the LOS in the hospital for individuals suffering from various diseases. This means that income inequity exists at the time of hospital admission but once they are admitted, the duration of stay at hospital is no longer determined by their economic status. However, this requires careful interpretation because it is quite likely that poor people may have been forced to sell off assets or borrow money for meeting the cost of hospitalisation for longer duration of stay. The above argument is strengthened by the fact that when socio-economic status is measured by education, inequity continues to persist, with illiterates having longer LOSs in the hospital. The policy measure that the government could take to improve the access of quality health care services for the poor is to strengthening the public health system through enhanced investments in the National Health Mission. JEL Classification: I140