Getting more for their dollar: Kaiser v the NHS: Price adjustments falsify comparison

BMJ 2002; 324 doi: https://doi.org/10.1136/bmj.324.7349.1332 (Published 01 June 2002) Cite this as: BMJ 2002;324:1332
  1. David U Himmelstein, associate professor of medicine,
  2. Steffie Woolhandler, associate professor of medicine
  1. Harvard Medical School, 1493 Cambridge Street, Cambridge, MA 02139, USA
  2. University College of Los Angeles School of Medicine, 2222 Santa Monica Boulevard, Suite 302, Santa Monica, CA 90404, USA
  3. NHS Confederation, London SW1E 5ER
  4. Rhode Island Hospital, Brown University Medical School, 493 Eddy Street, Providence, RI 02906, USA
  5. Department of General practice, Queen Mary University of London, London E1 4NS
  6. Bradford Health Authority, Shipley BD18 3LD
  7. Atlanta, GA 30306, USA
  8. Bristol

    EDITOR—The NHS is little cheaper than health care in the United States, according to Feachem et al.1 What's next on their agenda? War is peace? Freedom is slavery? The authors purport to show Kaiser's efficiency relative to the NHS. This task is hard, given two undisputed facts: firstly, the United Kingdom's per capita health expenditure is $1569, the United States's $4358; and secondly, Kaiser's casemix adjusted costs are about average for the United States. Undeterred, Feacham et al use an outrageous price adjustment, exclude many of Kaiser's costs, and ignore Kaiser's avoidance of the sickest and most expensive patients.

    Feachem et al's price adjustment inflates NHS costs by 52%, assuming that the NHS plays no part in constraining drug prices, administrators' or specialists' incomes, etc. Conversely, the adjustment excuses the US system from responsibility for the world's highest drug costs and the billions wasted on healthcare executives and other hangers on. Feachem et al adjust away the price controls that are an important advantage of non-market systems.

    Feachem et al trim Kaiser's costs by subtracting profits and high administrative expenses. Yet both are integral to the competitive market they extol. They falsely equate Kaiser's coverage with the NHS's, although Kaiser covers only miniscule amounts of nursing home care. Finally, many Kaiser patients—more than 12% according to a Kaiser memo—receive care outside Kaiser, costs which the authors exclude. Thus, Feachem et al understate Kaiser's actual costs.

    Contrary to Feachem et al's assertions, Kaiser cares for a relatively inexpensive slice of the population. Their claim that Kaiser cannot avoid the expensively ill by booting them out is technically correct; when Kaiser members lose their jobs (for example, because of illness) and hence employer paid coverage, Kaiser must offer them individual policies. But Kaiser may charge whatever it likes—often thousands per month. …

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