NCPA - National Center for Policy Analysis

Kaiser Outperforms Britain's National Health Service

January 30, 2002

Researchers from California compared costs and performance in the British National Health Service with the nonprofit health maintenance organization Kaiser Permanente in California. In many ways Kaiser Permanente is like the NHS, similar in age and providing a similar range of services for a population equivalent to that of a small country.

Comparisons among health systems are difficult. International studies usually conclude that the United States has high costs and poor population health outcomes. Per capita expenditure in the NHS were $1,402 while Kaiser spent $1,951 per person in 2000. However, when adjusted for purchasing power parity (PPP) and age differences between the systems members, the cost of the NHS rose to $1,764 per person.

Among the findings:

  • Per capita costs in Kaiser and the NHS are within 10 percent of each other, with Kaiser only costing $187 more than NHS.
  • Kaiser uses only one-third as many hospital days as the NHS.
  • American economist Alain Enthoven says Kaiser's performance is boosted substantially by competition.
  • Kaiser's performance in key areas, including key preventive practices and access to care, is significantly better.

However, critics of the study argue that some of the adjustments used by the authors remove a large part of the advantages the NHS uses to control costs. For example, the NHS benefits from being a monopsony -- the sole purchaser -- which lowers the prices it pays for drugs and medical staff. Critics claim that lower pricing is the point of having a single payer system like the NHS; thus, rather than being inefficient, they say the only problem with the NHS is underfunding.

Source: Richard G. A. Feachem, Neelam K. Sekhri, Karen L. White, "Getting More for Their Dollar: a Comparison of the NHS with California's Kaiser Permanente," British Medical Journal, January 19, 2001.

For text:


Browse more articles on Health Issues