It's crunch time for health care reform. Since wringing sufficient savings out of our bloated health care system to pay for the uninsured appears to be a political non-starter, talk has turned to raising taxes. One idea gaining traction is taxing health benefits, especially those that are high cost.

It’s a juicy target. Health benefits are not taxed as income, amounting to a $250 billion-per-year regressive tax subsidy (it’s regressive because high wage workers in higher tax brackets get a bigger tax break than lower wage workers in the same company plan). Limit that exclusion for any benefits above the 75th percentile of all insurance plans and the government would raise $452 billion over the next decade, according to a December Congressional Budget Office report. Couple that tax with President Obama's suggested Medicare savings and higher "sin" taxes on cigarettes, alcohol and sweetened beverages, and the ten-year, trillion-dollar price tag for guaranteeing health care coverage for everyone seems within reach.

But reformers on Capitol Hill may be in for a rude surprise if they go down that path. The CBO report explicitly stated that each analysis of a proposed spending cut or tax increase was calculated in isolation. Combining any one of them with other health care reform options could radically change the assumptions.

Taxing “expensive” benefit plans falls into that category. As the CBO report noted, those most likely to be hit by the new tax would be workers who live in areas with higher health care costs; who receive more generous benefits; and who work for “firms that had higher premiums because of the age or poor health of their employees.”

Only one of those categories – taxing people with so-called “Cadillac plans” – can be politically justified. Unfortunately, there are very few plans out there whose high prices are determined by the generosity of their benefits. The vast majority of costs in high price plans are driven by the other two factors: they are either in high-cost areas or they cover costly patients, or both.

Let’s take them one at a time. Does it make sense to increase taxes on individuals and families who are in company plans with high premiums simply because they’re in medically expensive areas (think New York, Southern California, McAllen, Texas)? Why not tax the drug and device companies, doctors and hospitals that profit from the useless drugs, tests and procedures? Taxing the people who have no control over that spending will only result in sick people eschewing more expensive care whether needed or not. Down that path lay worse health care outcomes.

How about taxing people in high cost plans simply because they belong to groups with older, sicker members? That would be far more regressive than the tax exclusion it seeks to replace. I spoke briefly last week with a health policy analyst working in a small shop where the average age was 52 and family health care premiums have shot over $21,000 a year, well above the 75th percentile cutoff envisioned by CBO. "Under that proposal, we would be taxed on $8,000 simply because of our average age, not the quality of our plan," he said.

Last week’s New England Journal of Medicine carried a defense of taxing high-cost health care benefits by Massachusetts Institute of Technology health care economist Jonathan Gruber. The criticisms "can be readily addressed by adjusting the cap to account for differences among firms in underlying cost factors. Employers, for example, could easily compute an adjustment factor, based on their firm's location or their workers' ages, that could be used to set the cap."

But wait! If employers are allowed to adjust the premiums they report based on local costs, employee age and their overall risk, most plans’ reported costs would gravitate toward the national mean. It's called community rating, which would be a very progressive reform, indeed. But to raise the same $452 billion over ten years from community-rated insurance plans would require a cutoff mark for taxing surplus benefits close to half of all plans, not the 25 percent projected by CBO.

Gruber called scaling back the tax exclusion “highly progressive” and a “win-win” solution that would reduce incentives for overinsurance, curb excessive health care spending, and raise the revenue needed to cover the uninsured.

I may not be an economist. But I know a thing or two about political science and health care. And in those fields, there’s another name for taxing half the population to pay for benefits for the other half, while expecting people to pick appropriate health care solutions based on price.

It’s called lose-lose.