OBJECTIVE: To compare the costs and performance of the NHS with those of an integrated system for financing and delivery health services (Kaiser Permanente) in California. METHODS: The adjusted costs of the two systems and their performance were compared with respect to inputs, use, access to services, responsiveness, and limited quality indicators. RESULTS: The per capita costs of the two systems, adjusted for differences in benefits, special activities, population characteristics, and the cost environment, were similar to within 10%. Some aspects of performance differed. In particular, Kaiser members experience more comprehensive and convenient primary care services and much more rapid access to specialist services and hospital admissions. Age adjusted rates of use of acute hospital services in Kaiser were one third of those in the NHS. CONCLUSIONS: The widely held beliefs that the NHS is efficient and that poor performance in certain areas is largely explained by under investment are not supported by this analysis. Kaiser achieved better performance at roughly the same cost as the NHS because of integration throughout the system, efficient management of hospital use, the benefits of competition, and greater investment in information technology.