China’s demographic landscape is rapidly changing, and the government has responded by launching ambitious social and health service reforms to meet the changing needs of the country’s 1.3 billion people. This week, officials approved a five-year plan to develop a comprehensive nationwide social security network.

Karen Eggleston, the Asia Health Policy Program (AHPP) director and a Stanford Health Policy fellow, discusses the success of China’s health care reforms—including its recently established universal health care system—and the long road still ahead.

Why is the overall health and wellbeing of China’s population important globally?

There are many reasons why the health of China’s citizens matters within a larger global context. On the most basic level, China represents almost 20 percent of humanity. But it is also a major player in the world economy and it depends on having a healthy workforce, especially now that its population is aging more. The government’s ability to meet the needs of its underserved citizens contributes to a more productive and stable China, and works towards closing the huge gaps we see in human wellbeing across the world.

China also potentially offers a model for other developing countries, such as India, that may want to figure out how to make universal health coverage work at a tenth of the income of most of the countries that have put it into place before.

What are some of the biggest changes in China’s health care system since 1949?

One of the most significant changes is that China has achieved very basic universal health insurance coverage in a relatively short period of time.  

Throughout the Mao period (1949–1978) there was a health care system linked to the centrally planned economy, which provided a basic level of coverage via government providers with a lot of regional variation. When economic reform came in 1980, large parts of the system—particularly financing for insurance—collapsed. The majority of China’s citizens were uninsured during the past few decades of very rapid social and economic development.

China’s overall population is changing quite dramatically, which means it has different health care needs, such as treating chronic disease and caring for an increasingly elderly population. The central government is trying to establish a system of accessible primary care—a concept that China’s barefoot doctors helped to pioneer but that fell into disarray—and health services that fit these new needs. 

How does China’s basic health care system work? Are there segments of the population still not receiving adequate coverage and care?

China has had a system where people can select their own doctors. Patients usually want to go to clinics attached to the highest-reputation hospitals, but of course, when you are not insured you almost always by default go to where you can afford the care. “It is difficult to see the doctor, and it is expensive” has been the lament of patients in China, so an explicit goal of the health care reforms has been to address this.

The term “universal coverage” has different definitions. China initially put in place a form of insurance that only covers 20 or 30 percent of medical costs for the previously uninsured population, especially in rural areas. Benefits have expanded, but remain limited. As with the previous system, disparities in coverage still exist across the population. China not only has a huge population with huge economic differences, but within that there is a large migrant worker population. It is a challenge to figure out how to cover these citizens and how to provide them with access to better care. The government is quite aware there are segments of the population not receiving equal coverage, and it continues to strive to resolve the issue.  

What are the greatest innovations in China’s health care system in recent years?

One of the most remarkable things China has achieved is really its new health insurance system. Even if the current coverage is not particularly generous it is nearly universal, and mechanisms are put in place each year to provide more generous coverage. China is also working on strengthening its primary care and population health services, infusing a huge sum of government money into these efforts. It is the only developing country of its per-capita income that has achieved such results so far.

Interestingly, a lot of people assume China achieved its universal coverage by mandate, while in fact the central government did so by subsidizing the cost for local governments and individuals. This reduces the burden, for example, on poorer rural governments and residents, and is one innovative way China is trying to eliminate the disparity in access to care.

Eggleston has recently published a working paper on China’s health care reforms since the Mao era on the AHPP website, as well as an article in the Milken Institute Review.

Gordon Liu, a Chinese government advisor on health care and the executive director of Peking University’s Health Economics and Management Institute, spoke at Stanford on May 29 on the future of China’s health care system.

A once-a-day pill to help prevent HIV infection could significantly reduce the spread of AIDS, but only makes economic sense if used in select, high-risk groups, Stanford researchers conclude in a new study.

The researchers looked at the cost-effectiveness of the combination drug tenofovir-emtricitabine, which was found in a landmark 2010 trial to reduce an individual’s risk of HIV infection by 44 percent when taken daily. Patients who were particularly faithful about taking the drug reduced their risk to an even greater extent – by 73 percent.

The results generated so much interest that the Stanford researchers decided to see if it would be cost-effective to prescribe the pill daily in large populations, a prevention technique known as pre-exposure prophylaxis, or PrEP.

They created an economic model focused on gay men, as they account for more than half of the estimated 56,000 new infections annually in the United States, according to the Centers for Disease Control and Prevention.

“Promoting PrEP to all men who have sex with men could be prohibitively expensive,” said Jessie Juusola, a PhD candidate in management science and engineering in the School of Engineering and first author of the study. “Adopting it for men who have sex with men at high risk of acquiring HIV, however, is an investment with good value that does not break the bank.”

For instance, using the pill in the general population of gay men would cost $495 billion over 20 years, compared to $85 billion when targeted to those at particularly high risk, the researchers found. The study will be published in the April 17 issue of the Annals of Internal Medicine.

Senior author Eran Bendavid, an affiliate of Stanford Health Policy at the Freeman Spogli Institute, said the results are a departure from a previous study. Earlier research found PrEP was not cost-effective when compared with other commonly accepted prevention programs.

The new Stanford study differs in a few important respects, taking into consideration the decline in transmission rates over time as more individuals take the pill. The Stanford team also assumed individuals would stop taking PrEP after 20 years, not stay on the drug for life, as the previous study had assumed.

The pill combination, marketed under the brand name Truvada, is widely used for treating HIV infection. But it wasn’t until a landmark trial, published in the New England Journal of Medicine in November 2010, that individuals and their doctors began to seriously consider using the drug as a preventive therapy. The drug’s maker, Foster City, Calif.-based Gilead Sciences Inc., has filed a supplemental new drug application to market it for prevention purposes.

The CDC issued interim guidelines on the drug’s use in January 2011, suggesting that if practitioners prescribe it as a preventive measure, they regularly monitor patients for side effects and counsel them about adherence, condom use and other methods to reduce their risk of infection.

In developing their model, the Stanford researchers took into account the cost of the drug – about $26 a day, or almost $10,000 a year – as well as the expenses for physician visits, periodic monitoring of kidney function affected by the drug, and regular testing for HIV and sexually transmitted diseases.

“We’re talking about giving uninfected people a drug that has some toxicities, so it’s crucial to have them monitored regularly,” said Bendavid, who is an assistant professor of medicine in Stanford’s School of Medicine.

Without PrEP, the researchers calculated there would be more than 490,000 new infections among gay men in the United States in the next 20 years. If just 20 percent of these men took the pill daily, there would be nearly 63,000 fewer infections.

However, the costs are substantial. Use of the drug by 20 percent of gay men would cost $98 billion over 20 years; if every man in this group took PrEP for 20 years, the costs would be a staggering $495 billion.

Given these figures, the researchers looked at the option of giving PrEP only to men who are at high risk – those who have five or more sexual partners in a year. If just 20 percent of these high-risk individuals took the drug, 41,000 new infections would be prevented over 20 years at a cost of about $16.6 billion.

At less than $50,000 per quality-adjusted life year gained (a measure of how long people live and their quality of life), that strategy represents relatively good value, according to Juusola.

“However, even though it provides good value, it is still very expensive,” she said. “In the current health care climate, PrEP’s costs may become prohibitive, especially given the other competing priorities for HIV resources, such as providing treatment for infected individuals.”

She said the costs could be significantly reduced if the pill is found to be effective when used intermittently, rather than on a daily basis. Current trials are examining the effectiveness of the drug when used less often.

Other co-authors are Margaret L. Brandeau, the Coleman F. Fung Professor of Engineering, and Douglas K. Owens, the Henry J. Kaiser, Jr. Professor at Stanford and senior investigator at the Veterans Affairs Palo Alto Health Care System. Owens also is director of Stanford’s Center for Health Policy and Center for Primary Care and Outcomes Research.

The study was funded by the National Institutes of Health and the Department of Veterans Affairs and supported by Stanford’s departments of Medicine and Management Science and Engineering.

Philanthropist and software giant Bill Gates spoke to a Stanford audience last week about the importance of foreign aid and product innovation in the fight against chronic hunger, poverty and disease in the developing world.

His message goes hand-in-hand with the ongoing work of researchers at Stanford’s Freeman Spogli Institute for International Studies. Much of that work is supported by FSI’s Global Underdevelopment Action Fund, which provides seed grants to help faculty members design research experiments and conduct fieldwork in some of the world’s poorest places.

Four FSI senior fellows – Larry Diamond, Jeremy Weinstein, Paul Wise and Walter Falcon – respond to some of the points made by Gates and share insight into their own research and ideas about how to advance and secure the most fragile nations.

Without first improving people’s health, Gates says it’s harder to build good governance and reliable infrastructure in a developing country. Is that the best way to prioritize when thinking about foreign aid?

Larry Diamond: I have immense admiration for what Bill Gates is doing to reduce childhood and maternal fatality and improve the quality of life in poor countries.  He is literally saving millions of lives.  But in two respects (at least), it's misguided to think that public health should come "before" improvements in governance.  

First, there is no reason why we need to choose, or why the two types of interventions should be in conflict.  People need vaccines against endemic and preventable diseases – and they need institutional reforms to strengthen societal resistance to corruption, a sociopolitical disease that drains society of the energy and resources to fight poverty, ignorance, and disease.  

Second, good governance is a vital facilitator of improved public health.  When corruption is controlled, public resources are used efficiently and justly to build modern sanitation and transportation systems, and to train and operate modern health care systems.  With good, accountable governance, public health and life expectancy improve much more dramatically.  When corruption is endemic, life-saving vaccines, drugs, and treatments too often fall beyond the reach of poor people who cannot make under-the-table payments. 

Foreign aid has come under criticism for not being effective, and most countries have very small foreign aid budgets. How do you make the case that foreign aid is a worthy investment?

Jeremy M. Weinstein: While foreign aid may be a small part of most countries’ national budgets, global development assistance has increased markedly in the past 50 years. Between 2000 and 2010, global aid increased from $78 billion to nearly $130 billion – and the U.S. continues to be the world’s leading donor.

The challenge in the next decade will be to sustain high aid volumes given the economic challenges that now confront developed countries. I am confident that we can and will sustain these volumes for three reasons.

First, a strong core of leading voices in both parties recognizes that promoting development serves our national interest. In this interconnected world, our security and prosperity depend in important ways on the security and prosperity of those who live beyond our borders.

Second, providing assistance is a reflection of our values – it is these humanitarian motives that drove the unprecedented U.S. commitment to fighting HIV/AIDS during the Bush Administration.

Perhaps most importantly, especially in tight budget times, development agencies are learning a great deal about what works in foreign assistance, and are putting taxpayers’ dollars to better use to reduce poverty, fight disease, increase productivity, and strengthen governance – with increasing evidence to show for it.

Some of the most dire situations in the developing world are found in conflict zones. How can philanthropists and nongovernmental organizations best work in places with unstable governments and public health crises? Is there a role for larger groups like the Gates Foundation to play in war-torn areas?

Paul H. Wise: As a pediatrician, the central challenge is this: The majority of preventable child deaths in Sub-Saharan Africa and in much of the world occur in areas of political instability and poor governance. 

This means that if we are to make real progress in improving child health we must be able to enhance the provision of critical, highly efficacious health interventions in areas that are characterized by complex political environments – often where corruption, civil conflict, and poor public management are the rule. 

Currently, most of the major global health funders tend to avoid working in such areas, as they would rather invest their efforts and resources in supportive, well-functioning locations.  This is understandable. However, given where the preventable deaths are occurring, it is not acceptable. 

Our efforts are directed at creating new strategies capable of bringing essential services to unstable regions of the world.  This will require new collaborations between health professionals, global security experts, political scientists, and management specialists in order to craft integrated child health strategies that respect both the technical requirements of critical health services and the political and management innovations that will ensure that these life-saving interventions reach all children in need.

Gates says innovation is essential to improving agricultural production for small farmers in the poorest places. What is the most-needed invention or idea that needs to be put into place to fight global hunger?

Walter P. Falcon: No single innovation will end hunger, but widespread use of cell phone technology could help.

Most poor agricultural communities receive few benefits from agricultural extension services, many of which were decimated during earlier periods of structural reform. But small farmers often have cell phones or live in villages where phones are present.

My priority innovation is for a  $10 smart phone, to be complemented with a series of very specific applications designed for transferring knowledge about new agricultural technologies to particular regions.  Using the wiki-like potential of these applications, it would also be possible for farmers from different villages to teach each other, share critical local knowledge, and also interact with crop and livestock specialists.

Language and visual qualities of the applications would be key, and literacy problems would be constraining.  But the potential payoff seems enormous.