Simulated Effects of Incomes-Based Policies on the Distribution of Physicians

As the United States enters a period of adequate physician supply (or even surplus), policies to ameliorate the maldistribution of physicians across communities and medical specialties will depend more heavily on explicit redistributional incentives. Targeted financial incentives are an obvious method for encouraging desirable practice choices. This paper simulates the effect of a series of incomes policies on the distribution of sample physicians across specialties, community sizes, and practice modes. The predictions are based on the estimated parameters of a simultaneous choice model for these three dimensions of a physician's practice. The results suggest that policies based on financial incentives are more effective than previous research has indicated.