Cost comparisons with US-style care are unfair
It appears the BMJ study1 used by ministers to justify their crusade to bring US health care systems to the UK was fundamentally flawed, with NHS costs being significantly overstated, Kaiser's costs understated, and comparisons made worse by dramatic miscalculations.
Kaiser has six million clients in California, mainly enrolled through their employers' health insurance programmes. As a result, most are relatively affluent people of working age who tend to be less-demanding consumers than the elderly or chronically ill, who are covered by the NHS's universal health care for a population of 60 million.
As a result, the NHS treats almost twice as many over-75s as Kaiser. More tellingly, nearly a quarter of NHS patients are on low incomes, compared with just 3.5 per cent of Kaiser's.
Given the links between low income and poor health, the original study failed to adjust for the heavier demands on the NHS. The net result is that the patients treated by the NHS and Kaiser are fundamentally different in their health needs.
The new research2 examined figures used and found a host of questionable assumptions. One of the most obvious was the failure to include charges Kaiser patients pay each time they use the service, in addition to insurance costs.
Depending on their cover, Kaiser clients can pay up to $50 for each visit to an outpatient clinic or their equivalent of a GP, $85 for A&E and $500 for childbirth. Omitting these contributions had the effect of reducing Kaiser's costs, while the BMJ study added £2.6 billion to the NHS's costs to account for UK expenditure on private health care.
But even then, the BMJ article found the NHS cost $1,192 per person while Kaiser cost $1,950. So how could the article's authors justify their claim 'that costs were broadly similar within 10 per cent' between Kaiser and the NHS?
The answer seems to be a controversial means of equating costs between the two countries, using foreign exchange market currency conversions and purchasing power parity – when either one or the other is typically used by economists.
In other words, the BMJ study adjusted for differing costs between the US and the UK, and then also made an additional exchange rate adjustment – a form of double counting that harms the NHS's cost-effectiveness.
Dr Kailash Chand
1 BMJ, Jan 2002; 324: 135-143
2 Br J Gen Pract, 2004; 54: 415-421