After Jonathan Gruber of MIT ran a piece in the New England Journal of Medicine a month or so ago calling a tax on health benefit a "win-win proposition," I somewhat intemperately headlined my rejoinder "Taxing Benefits: A Lose-Lose Proposition."

Now come David Himmelstein and Steffie Woolhandler, the nation's two most outspoken advocates of single-payer health insurance, to add a third "lose" to the equation. In the current issue of NEJM, they show (it's free; you can click) why repealing the exclusion would in fact be a regressive tax on the poor and middle class. In brief, it boils down to the fact that most insurance plans cost about the same. So even though every individual rich person gets a larger tax break, the individual low- and moderate-income person's tax break is a larger percentage of their income.

So, imagine a person with $30,000 a year in income that is taxed at a 10 percent tax rate who gets a $15,000 health plan from their employer. At the same firm, a $200,000-per-year man who is taxed at a 30 percent rate gets a more generous plan: $18,000 a year. Both now have to pay taxes on those plans (assuming the whole exclusion were repealed).

The tax break to the lower-income worker, now repealed, was worth $1,500. That additional tax is 5 percent of his total income. The high-income employee currently gets a 30 percent tax break on $18,000 or $5,400. That's now additional tax. But that's only 2.7 percent of his income.

So, as a percent of income, the lower-wage worker is actually getting hit harder by repealing the exclusion than high-end salaryman, even though that high-end guy was originally getting a larger tax break before repeal. Hence, Himmelstein and Woolhandler argue, keeping the tax exclusion in place is a form of progressive taxation.

I've always suspected that the real goal of those who argue for repealing the tax exclusion for health benefits is to begin the process of moving Americans away from employer-provided health insurance. That, in my view, is a good idea and worthy of debate. But it shouldn't be snuck in the back door by eliminating the tax exclusion, which is very regressive on a number of fronts.