The Public Health Bit

One major government priority, public health, has been giving me trouble. Seeing Sicko (excellent film) convinced me that publicly funded health care was potentially superior to the U.S.'s existing profit-maximizing system. I was convinced of the improved equity (an essential government priority), public health improvements, and economic efficiency of the systems employed in France, England, Canada, and Cuba.
So transitioning to publicly funded health care well would create a public benefit and create savings. Good, the policy makes sense, but how to pay for it?
One idea I had immediately was a Pigouvian tax on pollution. This would focus on major public health hazards like cigarettes, mercury, auto exhaust, lead, and trans fats. This health tax would not ban health hazards, but would price them at their true cost. This would cut pollution and pay for its effects on people, a double benefit.
Still, I didn't have a good sense of how to pay for the majority of health costs not directly attributable to pollution.
Katherine Mason, my girlfriend, gave me the solution. People could pay a flat amount for insurance, which would then come down based on positive steps they took for their own health. Instead of costing money, regular checkups and exams would save money off the insurance. Overweight people who lost weight in a healthy way or people who quit smoking would enjoy an insurance break. In this way, people would be rewarded for making the right decisions, and pay a fair (instead of devastating) economic price otherwise. People already making smart decisions like maintaining a healthy weight and not smoking would enjoy the same low rate, similar to some existing insurance programs. There would still be a nominal fee to discourage excessive visits, like a dollar or two.
I would be curious to see a mixed system where private insurers and hospitals would compete with and complement a publicly funded system. I suspect that there are places where private industry could introduce efficiencies into a system geared towards public health and safety over profit.
I suspect that a system like this might also cut down the cost of Medicare, though extended lifespans might eat up those efficiencies. Still, not a bad trade at all.
I should also point out that this system would offer a significant rise in overall lifespans, quality of life, productivity, and general wellbeing and happiness. It would also increase the productivity of land, causing a small boost in land prices to make up the difference. A land tax would capture that additional value and, if significant, it could be used to help cover the health system or go into general revenue.
After reading some Thomas Jefferson: Also, the baseline cost to premium holders would vary according to income level. Someone with little or no income but doing everything to maintain good health would pay very little, while others would pay up to market rate. Low income premium holders would be assisted with revenue from land taxes on value drawn from the program's improvements and profits from market rate premium holders.