From Shanghai to São Paulo, people around the world are living longer than ever, challenging long-held ideas about retirement and well-established national retirement systems. Stanford health economists Karen Eggleston and Victor R. Fuchs offer an innovative view of the global aging phenomenon in an article published recently in the Journal of Economic Perspectives.

Drawing on a century of demographic data from 17 countries, Eggleston and Fuchs show that the share of increases in life expectancy realized after age 65 was only about 20 percent at the beginning of the 20th century but close to 80 percent by the dawn of the 21st century. Expected lifetime labor force participation as a percent of life expectancy is now declining. Eggleston and Fuchs share four interrelated responses to the economic and social challenges posed by this “new demographic transition:”

• Increase the retirement age.
• Encourage savings.
• Strengthen education.
• Emphasize healthy lifestyles early to ensure productivity in old age.

Eggleston is director of the Asia Health Policy Program at the Shorenstein Asia-Pacific Research Center. Fuchs is Henry J. Kaiser, Jr., Professor Emeritus, in Stanford’s Department of Economics and Department of Health Research and Policy, and a senior fellow at FSI and SIEPR.

Of the four policy responses the article proposes, is one especially critical?

Fuchs: The most important solution in terms of its potential impact would be people changing their attitudes toward retirement. This would mean people postponing retirement and saving more during their working years. If you work five years longer, for example, you would have greater savings and a shorter period of time when you would need the money.

Eggleston: We tend to think of the solutions as being interrelated. To address this longstanding and inevitable global demographic transition, organizations and policy structures need to support changes in individual behavior. In the case of the retirement age in the United States and European countries, policymakers need to change the many incentives that encourage people to retire younger.

What do you most hope policymakers will take away from the article?

Fuchs: We hope they will recognize the absolute need for individuals and organizations to plan for later retirement.

What are the special challenges faced by China and India, the world’s largest populations?

Eggleston: Longer lives in China and India contribute to improved human development, yet population aging also brings special challenges. China’s population is aging more rapidly than India’s and both countries need to invest more in the education and health of their young people, especially in poor rural areas.

In India, nutrition and education will help to reap a one-time boost to economic growth if the large cohorts of the working age population can be productively employed, while building a foundation for sustained improvement of living standards. China’s youth need to be as productive as possible to support the elderly while continuing to improve the national living standard.

The coming decade will be crucial in China, as the country transitions into a new economic phase and expands its fledging social protection system. The goal should be to ameliorate disparities and protect the vulnerable, while maintaining a financially sustainable and culturally appropriate balance of government and family responsibility for old-age support.

Preparing a meal in some of the world’s poorest rural areas can turn an ordinary activity into a deadly chore. Animal dung and crop scraps often fuel the indoor fires used for cooking. And before any food fills a hungry belly, thick black smoke fills a family’s lungs.

Pneumonia and other acute respiratory infections kill about 1 million people a year in low-income countries, making them the top cause of death in the developing world and the greatest threat to children’s lives. Makeshift stoves belch much of the polluted air leading to those illnesses. About 75 percent of South Asians and nearly half the world’s population use open-fire stoves inside their homes.

“The smoke is asphyxiating,” said Grant Miller, an associate professor of medicine at Stanford working on ways to get people to buy – and use – cleaner, safer stoves. “It burns your eyes and you can’t stop coughing.”

Governments and humanitarian organizations have urged people to trade their traditional stoves for safer models, many of which have chimneys that funnel smoke out of a home. But the switch from dangerous stoves has been slow to come, even though most people using them know they’re harmful.

Miller and his colleagues are studying what’s behind the reluctance and what can be done about it. They suspect much of the problem rests with the widespread approach to clean cookstove conversion, which focuses on educating people about the appliances’ health hazards and offering new models at a low cost.

Their most recent findings, published in the Proceedings of the National Academy of Sciences, boil down to this: Clean and modern cookstoves don’t have features people want. And until they’re redesigned, people are unlikely to bother with them.

“People don’t think of cookstoves as health technologies,” said Miller, an associate professor of medicine and a Stanford Health Policy faculty member at the university’s Freeman Spogli Institute for International Studies. Miller is the senior author of the PNAS paper, which published online June 11.

“They don’t think respiratory illness is the biggest health problem that they have,” he said. “And when you ask them what they want from a stove, they talk about saving time and having better fuel efficiency. They’re not talking about smoke emissions.”

In the first of two studies, Miller – joined by Yale researchers and Lynn Hildemann, a Stanford engineering professor affiliated with the Stanford Woods Institute for the Environment – surveyed about 2,500 women who cook for their families in rural Bangladesh. 

Nearly all of the women use traditional stoves, and 94 percent of them said they know the smoke from their stoves can make them sick. But 76 percent said the smoke is less harmful than polluted water, and 66 percent said it wasn’t as dangerous as rotten food.

“People know their cookstoves are bad, but they don’t think cookstoves are the most important problem they face,” Miller said. “They’d rather spend their money fixing those things and getting their kids into a good school than buying a new cookstove.”

When asked what features are most important in a stove, the women talked about things that could save fuel costs, cooking time and the hassle that goes into collecting fuel.

“A very small percent said reducing pollution was important,” Miller said.

The researchers then tried to assess more directly how Bangladeshis value new stoves. They offered 2,200 customers across 42 rural villages the opportunity to buy one of two models – one boasted improved fuel efficiency; the other had a chimney to reduce exposure to indoor smoke.

At the market prices of $5.80 for an efficient stove and $10.90 for the chimney stove, less than a third of customers ordered either model. And when the stoves were delivered a few weeks after the orders were taken, a very small number of families actually went through with the purchase of either model.  Large randomized discounts increased customer interest in fuel-efficient stoves, but did little to raise purchase rates of chimney stoves.

“A big implication is that the health education and social marketing approaches aren’t going to work,” Miller said. “You need to get inside the heads of the users and figure out what they really want and value – even if unrelated to smoke and health – and then give it to them.”

The lead author of the PNAS paper was Ahmed Mushfiq Mobarak, an economist at Yale. It was co-authored by Yale researchers Puneet Dwivedi and Robert Bailis. Their work was supported by the Freeman Spogli Institute’s Walter H. Shorenstein Asia-Pacific Research Center, Stanford’s Woods Institute for the Environment, and the International Growth Centre.

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.

As incomes rise around the world, health experts expect a more troubling figure to increase as well: the number of diabetics in developing countries.

In China and India – two of the world’s most populous nations with fast-paced economies – the prevalence of diabetes is expected to double by 2025. Between 15 and 20 percent of their adult population will develop the disease as household budgets increase, diets change to include more calories and new health problems emerge.

But China, India and other developing countries are not fully prepared to deal with the rising trend of diabetes. And a growing number of diabetics aren’t getting the care they need to prevent serious complications, Stanford researchers say.

Even with insurance, many diabetics don’t have essential medications that could help them manage their conditions. In many cases, people are spending a great deal of their household incomes to pay for their treatment, said Jeremy Goldhaber-Fiebert, an assistant professor of medicine who led the research team.

“Public and private health insurance programs aren’t providing sufficient protection for diabetics in many developing countries,” said Goldhaber-Fiebert, a faculty member at Stanford Health Policy at the university’s Freeman Spogli Institute for International Studies. “People with insurance aren’t doing markedly better than those who don’t have it. Health insurance and health systems need to be re-oriented to better address chronic diseases like diabetes.”

Findings from the study are online and will be published in the Jan. 24 edition of Diabetes Care, the journal of the American Diabetes Association. The journal article was co-authored by Jay Bhattacharya, an associate professor of medicine and Stanford Health Policy faculty member; and Crystal Smith-Spangler, an instructor at Stanford’s Department of Medicine and an investigator at the Palo Alto VA Health Care System.

Failure to adequately manage diabetes will lead to more severe health problems like blindness, heart disease and kidney failure. It also harms the otherwise healthy, Goldhaber-Fiebert said.

Diabetes often strikes people at an age when they’re taking care of children and elderly parents. To sideline these primary caretakers as dependants will lead to a heavy burden for communities and create an obstacle for economic growth, he added.

Using responses to a global survey conducted by the World Health Organization in 2002 and 2003, Goldhaber-Fiebert and his colleagues examined data from 35 low- and middle-income countries in Asia, Latin America, Africa and Eastern Europe to determine whether diabetics with insurance were more likely to have medication than those without insurance.

They also wanted to know whether insured diabetics have a lower risk of “catastrophic medical spending,” a term the researchers define as spending more than 25 percent of a household income on medical care.

“Surprisingly, diabetics with insurance were no more likely to have the medications they need than uninsured diabetics,” Goldhaber-Fiebert said. “They were also no less likely to suffer catastrophic medical spending.”

There are many reasons why health insurance may not protect diabetics in developing countries against high out-of-pocket spending. In some cases, there’s a lack of sufficient medication – such as insulin – that regulate glucose levels. Without those drugs, there’s a greater risk of complications that often lead to more hospitalizations and more expenses.

In other cases, co-payments and deductibles are too high. Sometimes, drugs and medical services to prevent diabetes complications are not covered. And doctors and hospitals don’t always accept insurance.

“Better policies are needed to provide sufficient protection and care for diabetics in the developing world,” Goldhaber-Fiebert said.

Without medications to manage diabetes and prevent secondary complications, the condition will worsen and the burden of catastrophic spending will increase, he said.

“It’s important to get ahead of the curve and prepare so there’s an infrastructure in place to deal with these health and cost issues,” he said.

While preventing diabetes in the first place would be ideal, programs and policies must be established to care for the many cases that will surely continue to exist.

“There isn’t a single country that’s managed to entirely arrest or reverse the trend of diabetes,” he said. “Programs that focus on primary prevention are extremely important, but the reality is that the developing world faces hundreds of millions of diabetes cases that are unlikely to all be prevented.”