In discussions on the development of the institutional framework for decisions on the benefit package of social health insurance in Germany, the English National Institute for Clinical Excellence (NICE) is considered as either a good or a bad example for reform. According to this study, the procedures and criteria applied by NICE for making health care coverage decisions are legitimate. Procedures are transparent and interest groups are broadly represented. Decision criteria include cost effectiveness of services - albeit only if information on cost effectiveness is available and highly evident. Furthermore, cost effectiveness is not the only criteria for coverage decisions. NICE very rarely induces strong direct rationing, but rather leaves room for discretion. However, the trade-off between maximising allocative efficiency and avoiding distributional consequences becomes apparent.