Huntington's disease is unusually cruel. Symptoms tend to emerge in early middle age. One's cognitive functions waste away until dementia sets in, and victims are extremely vulnerable to heart disease, physical injury and suicidal depression. Indeed, according to one study, as many as 27% of sufferers attempt suicide. The condition is also highly predictable. If you have one parent with Huntington's disease, you have a 50% chance of inheriting it.

Given that the costs of care are staggeringly high, it poses a problem for insurers. Would you voluntarily insure someone with Huntington's disease without charging a premium that reflects these predictably high costs? Such behavior, however admirable, would soon lead to bankruptcy. And though Huntington's disease is unusual in its high degree of predictability, it may well be a glimpse into the future, when advanced genetic screening will give a much richer and fuller portrait of the disease risks we face. In this world, health insurers will have a reliable sense of how much a particular client will incur in medical losses over time.

In 2007, economist Stephen Cecchetti argued that this technological revolution would eventually lead to single-payer, publicly run health systems in all of the advanced democracies. Private insurance as we understand it depends on the careful management of risk; but as we improve our ability to forecast future health outcomes, this model starts to break down. In Cecchetti's view, only universal risk pools are capable of protecting the interests of the most vulnerable. No democracy will tolerate the emergence of a genetic underclass. But must protecting the vulnerable mean eliminating private initiative? This is the central question that should be at the heart of the health reform debate.

Cecchetti makes a very strong case. It's hard to see how we can protect people with Huntington's disease without imposing onerous regulations on private insurers. To achieve universal coverage, reformers have proposed measures that would, among other things, bar insurers from charging on the basis of medical history; mandate that everyone buy health insurance; and subsidize low-income households. This would drive down insurance premiums for those with Huntington's disease while raising them for many others.

It's easy to see why private insurers might like this world very much. After all, people are forced to buy the product whether they want it or not, and private insurers are insulated from price competition. The problem of adverse selection is mitigated by regulations that force all insurance providers to offer near-identical benefits. Real competition is replaced by Potemkin competition. This scenario, which amounts to a massive corporate giveaway in the name of universal peace and harmony, is one of the main reasons progressives strongly support a public option: Depending on how this option is designed, it can force private insurers who might otherwise run amok to keep their costs down.

In his brilliant and badly underappreciated Total Cure: The Antidote to the Health Care Crisis, Harold Luft, a professor at University of California, San Francisco, and director of the Palo Alto Medical Foundation Research Institute, offers an approach that addresses Cecchetti's concerns while leaving considerable room for competitive markets.

The basic idea is that all hospitalization and chronic illness expenditures, which represent more than half of all medical expenditures, would be covered by a mandatory "Universal Coverage Pool." The UCP would offer a form of reinsurance designed to improve incentives for providers and to protect individuals, like Huntington's disease sufferers, against ruinous medical expenses. Rather than provide coverage directly to consumers, it would serve as a direct payer to hospitals and payment intermediaries or health insurers who work with primary care physicians.

Like Cecchetti, Luft seems to recognize that advances in medical technology make the traditional approach to private health insurance less viable. Yet he also sees the value in promoting constructive competition.

Part of the appeal of Luft's approach is that it is very open-ended: While UCP coverage for big-ticket costs is mandatory, wraparound coverage is optional. His plan could be financed through something like our current system of tax incentives for employers, or we could finance it through taxes. And though fairly complex in its details, the basic outlines are simple and attractive: With the UCP in place, no one will ever go bankrupt due to illness; private insurers and providers will compete on the basic of cost and quality; and the health system will get better and cheaper over time.