Physician Freedom of Contract in Ontario: An Economic Justification for the Ban on Extra-billing, with Some Recommendations for Structural Change

SUSAN M. HUTTON

ABSTRACT

Following a brief summary of the political factors leading up the extra-billing debate across Canada and the doctors' strike in Ontario in 1986, this paper examines the validity of economic and libertarian arguments used in support of extra-billing. The classical economic market model is explained, and the application of this competitive model to the market for health care services is explored. The preconditions for the effective functioning of a competitive market are found to be lacking in the health services sector. Both theory and the evidence point to extra-billing as being incapable of making the health care system more efficient, and as having a discriminatory impact on the poor. Extra-billing could, however, serve a useful role in providing some degree of autonomy to physicians who must otherwise "bargain" with OHIP on very unfair terms. Some alternatives to the current payment system and structure of the health care system that would be both more efficient and fair to physicians are discussed. Extra-billing in any form, however, does not hold the key to the improvement of the Ontario health care system.

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Citation: (1989) 47(Supp) U.T. Fac. L. Rev. 780.
Copyright © 1989. University of Toronto Faculty of Law Review.
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