Retraction: In June 2012, Stanford researchers Rajaie Batniji and Eran Bendavid retracted the research findings explained in the following article. Their findings, presented in the essay, "Does development assistance for health really displace government health spending? Reassessing the evidence," contained errors in statistical model choice and reporting. The essay was published May 8, 2012, by the journal PLoS Medicine. The researchers erroneously concluded that there was no significant displacement of foreign aid. When they discovered their mistake, they informed editors at PLoS Medicine and moved to correct the record. The editors agreed with the need for the retraction and accepted the authors’ explanation of their error. The retraction can be read at www.plosmedicine.org/article/info%3Adoi%2F10.1371%2Fjournal.pmed.1001214.

When a 2010 study concluded that about half the money given to international governments for providing health care services isn’t used as intended, skeptics who argued that foreign aid is largely wasted were handed a powerful piece of data to bolster their claims.

But Stanford researchers Rajaie S. Batniji and Eran Bendavid say those findings are flawed. In an article featured in the May 8th edition of PLoS Medicine, Batniji and Bendavid say the two-year-old study by researchers at the University of Washington should not be used to guide decisions about how much money to give and who should get it.

“We can’t say that there’s absolutely no displacement of foreign aid, but these earlier findings are too tenuous for the basis of policy,” said Batniji, an affiliate of the Center on Democracy, Development, and the Rule of Law at the Freeman Spogli Institute for International Studies.

Batniji and Bendavid, an affiliate of FSI’s Stanford Health Policy and an assistant professor of medicine, are taking on the 2010 study – which appeared in the Lancet – at a critical time for foreign assistance programs.

The United States, which gives about half of all the world’s health aid, plans to chop its $10 billion budget by about 4 percent in the coming fiscal year. That’s the first cut in more than a decade. And officials have shown no signs of switching their preference of bypassing national governments as recipients of health aid, funneling more than half of U.S. support to non-governmental organizations instead.

Batniji and Bendavid decided to re-analyze the data used by the University of Washington researchers after meeting with policymakers who pointed to the study as a cautionary tale of foreign governments that waste and mismanage money earmarked for health programs.

“People were citing the Lancet piece, saying this was starting to shape how they thought about giving money,” said Batniji, who is also a resident physician at Stanford Medical Center. “But when we started asking questions about what the actual displacement looks like, the answers didn’t seem very compelling or reasonable.”

Taking a fresh look at the same numbers used for the 2010 study – public financing data culled from the World Health Organization and the International Monetary Fund – the researchers saw a different story emerge about the use of foreign aid in the health sector.

Once Batniji and Bendavid excluded conflicting and outlying data, such as huge discrepancies between WHO and IMF estimates and information about countries that were getting very small amounts of money from other countries, “there was no significant displacement of foreign aid,” Bendavid said.

The Stanford researchers’ findings are poised to influence a debate among policymakers and donors over whether it’s more efficient to give international assistance slated for health spending to government agencies or NGOs.

“We want to free donors of feeling that if they give money directly to governments, the money will be offset and used for an unintended purpose,” Batniji said. “The concern about displacement really amplifies the demands we make on governments for how they use the money. And that is at odds with a recent movement to let foreign governments set their own agendas for how to spend money.”

The research conducted by Batniji and Bendavid was supported by FSI’s Global Underdevelopment Action Fund and the Dr. George Rosenkranz Prize awarded to Bendavid in 2010.

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.

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.

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.”