AMY GOODMAN: President Bush also unveiled his plan to address the healthcare crisis in this country by changing the tax code. He proposed replacing the current tax break for employer-sponsored health insurance with a standard tax deduction for health insurance coverage. He claims this will encourage more people not covered by medical insurance to buy a plan and discourage others from keeping the most costly healthcare plans. Bush’s plan would also divert federal aid from public hospitals in an effort to move the uninsured into private health coverage.

PRESIDENT GEORGE W. BUSH: And so, tonight I propose two new initiatives to help more Americans afford their own insurance. First, I propose a standard tax deduction for health insurance that will be like the standard tax deduction for dependents. Families with health insurance will pay no income on payroll tax or payroll taxes on $15,000 of their income. Single Americans with health insurance will pay no income or payroll taxes on $7,500 of their income. With this reform, more than 100 million men, women and children who are now covered by employer-provided insurance will benefit from lower tax bills. At the same time, this reform will level the playing field for those who do not get health insurance through their job. For Americans who now purchase health insurance on their own, this proposal would mean a substantial tax savings: $4,500 for a family of four making $60,000 a year. And for the millions of other Americans who have no health insurance at all, this deduction would help put a basic private health insurance plan within their reach. Changing the tax code is a vital and necessary step to making healthcare affordable for more Americans.

My second proposal is to help the states that are coming up with innovative ways to cover the uninsured. States that make basic private health insurance available to all their citizens should receive federal funds to help them provide this coverage to the poor and the sick. I’ve asked the secretary of health and human services to work with Congress to take existing federal funds and use them to create Affordable Choices grants. These grants would give our nation’s governors more money and more flexibility to get private health insurance to those most in need.

AMY GOODMAN: Healthcare advocates are criticizing Bush’s plan and point out it does not expand coverage for the uninsured. They say it actually shifts more of the cost of healthcare onto working Americans and poses a new tax on those that already have healthcare and does nothing to hold down skyrocketing healthcare costs.

With us now from Boston is Dr. Steffie Woolhandler, associate professor of medicine at Harvard University, co-director of Harvard Medical School General Internal Medicine Fellowship program. Doctor Woolhandler is also co-founder of Physicians for a National Health Program. Welcome to Democracy Now!

DR. STEFFIE WOOLHANDLER: Glad to be here.

AMY GOODMAN: Your response to President Bush’s proposals?

DR. STEFFIE WOOLHANDLER: Well, Bush is proposing some minor fiddling with the tax code. He’s not coming close to fixing the real problems in the healthcare system, the 47 million uninsured Americans. But the tens of millions more who already have private health insurance, they already have private coverage, but they’re still not protected in the event of a serious illness, because their coverage is full of gaps, like co-payments, deductibles, uncovered services, such that if they face a major illness, they can still be bankrupted by the costs, despite having health insurance. So, Bush has not addressed the problems of the uninsured with this minor tinkering, if you will, with the tax code. He has not faced the problems of the tens of millions of Americans with health insurance, who still can’t afford care if they’re seriously ill. So he has put the problem on the table, but he’s put nothing there in the way of solutions.

AMY GOODMAN: But could you address each point, since this will now become what is debated — though, of course, you support universal healthcare — what President Bush is suggesting?

DR. STEFFIE WOOLHANDLER: Sure. Well, the tax deductions will be quite expensive initially, about $30 billion to $40 billion, and virtually all of the benefit will go to the wealthiest, because the value of a tax deduction is dependent on your tax bracket. So the poorest taxpayer, who gets a $15,000 tax deduction, only gets a refund of $147, scarcely enough to buy health insurance, whereas the wealthiest taxpayers might get a tax refund from that new deduction of $5,400, which is real money.

So, whenever you do tax deductions, you’re essentially handing the money back to people in high tax brackets — the wealthy. So that’s the problem, at least initially, with using the tax code in this way. It’s just handing money to the wealthy and not really putting money in the hands of low-income people who need help paying for healthcare.

In terms of transferring money from hospitals to state governments, that’s completely the wrong thing to do. Hospitals are the safety net — not a very good safety net, but it’s what we have. If you get hit by a truck today, you will be taken to a hospital and cared for, whether or not you have your insurance card in your pocket. That’s the safety net. And what Bush is going to do is take money away from the existing safety net without providing or guaranteeing a new safety net. He’ll hand the money to the states, who may do something good and may completely waste the money. So I think that’s a very bad idea, as well.

AMY GOODMAN: So, you’re actually talking about redirecting some of the $30 billion the government spends to care for people who go directly to the hospital for care and giving that money to the states?

DR. STEFFIE WOOLHANDLER: That’s what he’s talking about. But he’ll be damaging the existing safety net, before there’s a new safety net in place. And I can’t agree with that. I think uninsured patients will suffer, but also insured people who show up at an emergency room will be forced to deal with the shortages of funds and personnel that this is going to create.

AMY GOODMAN: Dr. Steffie Woolhandler, you’re well known for advocating for universal healthcare. When the Democrats were in office before — now they’re back in power — but when President Clinton was president, Hillary Rodham Clinton was key in trying to push for a reform of the healthcare system that was not about universal healthcare. What do you see is possible right now? What do you think that needs to be done? You’ve got the Democrats in office now. Are things really going to change?

DR. STEFFIE WOOLHANDLER: Well, we’re in a much better position. Many of the supporters of single-payer national health insurance, people who have signed the bills, the HR 676, supporters of national health insurance are now in charge of key House committees. We’re going to be able to do hearings. We’re going to be able to get information out of the federal government, where they’ve stonewalled us before for the information we need. There’s likely to be a single-payer bill introduced into the Senate.

AMY GOODMAN: And what would that mean? When people hear single payer now in this country, it’s hardly discussed. The corporate media hardly takes it seriously. What is single payer?

DR. STEFFIE WOOLHANDLER: Right. Well, I know President Bush said he doesn’t want national health insurance. That’s one of the things he said last night. But what single payer means, that every American would get a card like a Social Security card, and you could use it to get free medical care at your choice of doctor or hospital. There would be no co-payments, no deductibles for covered services. That’s what people in Canada have. That’s what people in most of Western Europe and Australia have. Every other developed nation has gone to some form of national health insurance — that is, nonprofit, tax-funded insurance. And they manage to cover all of their citizens without uninsured people, and for people who have coverage, they don’t have to worry about bankruptcy because of gaps in their coverage. So that’s what we’ve been advocating. Those principles are embodied within HR 676, the single-payer bill. It’s an idea that’s supported at this point by a plurality of American physicians, by many of the physicians and nursing organizations, and something that needs to be discussed and debated by the American people and by our politicians.

AMY GOODMAN: How powerful is the insurance lobby, and where does Big Pharma, the pharmaceutical industry, play into this?

DR. STEFFIE WOOLHANDLER: Well, the insurance lobby and Big Pharma are the major opponents of national health insurance. The spokesman for the trade organization of health insurance said, “We are completely and totally opposed to national health insurance. It’s a life or death struggle for us.” And that’s a direct quote. The insurance industry is extremely powerful. They lobby. They give campaign contributions. And there’s no role for a private insurance industry in an efficient, affordable well-run health insurance program.

Big Pharma has also opposed national health insurance, because every nation that has national health insurance has turned around and negotiated with the pharmaceutical industry and forced them to lower their prices. So the Canadians and Europeans spend about 60 cents for every dollar that we do in healthcare. That is, the price of the exact same drugs that we take in the United States is about 40 percent lower in nations with national health insurance. The pharmaceutical industry knows that, and that’s part of why they oppose national health insurance.

The insurance industry is a different story. You know, the private health insurance industry has huge overhead costs. Some of the HMOs take as much as 22 percent of the total premium as overhead for their overhead and profit. That means for every dollar you give to a company like CIGNA, as little as 78 cents ever comes out to pay doctors, nurses, or even pharmaceuticals. An efficient national health insurance program could run an overhead of between 1 and 3 percent.

AMY GOODMAN: Dr. Steffie Woolhandler, we’re going to have to leave it there. I thank you very much for being with us, co-founder of Physicians for a National Health Program, a professor at Harvard Medical School.