Universal Health Insurance

Joe Paduda over at Managed Care Matters posted an article in December about a two-pronged strategy to reform the U.S. health care system. He proposes both universal coverage and community rating as viable remedies to rising health costs. I'm not too sure if I understand exactly what community rating is, or why it is so different from the other means of dividing a population to determine insurance costs. Joe says that with a community rating system "the only means of altering or modifying the premium amount per insured is by geographic area," but doesn't that just mean that geographic areas will become placeholders for things like race and income? How big will the geographic areas be? One could argue that if you give insurers the option of charging people different amounts based on any unit smaller than the state itself, insurers will find a way to make location synonymous with age, sex, and class. Or am I not understanding something?