there is a lot of misinformation being propagated out there about insurance companies suffering hardships because of the necessity of insuring people with pre-existing conditions, complete with assertions that the whole enterprise will go down in flames if droves of healthy young people fail to sign up

you would think that the health insurance industry was barely making a profit

in fact of course insuring a person with pre-existing conditions does not automatically lead to an insurance company taking a loss - every policy is a carefully calibrated gamble, which is much more likely to lead to more income for the company rather than a payout, especially in the short term

health insurance company profits are typically estimated at an overall average of about 3.3% per policy, with the overwhelming majority of policies being employer based family policies costing about $200-300/m. multiply that by the estimated number of covered families in the united states, and you’ll get a good estimate of overall net profit for the industry. even if all persons with pre-existing conditions sign up, and very few of these healthy young persons who don’t already have insurance, it will have some impact on the overall profit margin, but hardly enough to eliminate it

and then there is re-insurance, not a very well known aspect of the insurance industry

re-insurance is required by law for most forms of insurance. re-insurance is a policy taken out on a group of regular insurance policies. if the payout on the group of policies exceeds a certain amount during some period of time, the re-insurance policy can be cashed in

basically, re-insurance is insurance against losing too much money

so, if in fact it turned out that some group of policies taken out by people with pre-existing conditions turned out to be a bad gamble, and the insurance company lost a zillion dollars on it in some given year, they would cash in their re-insurance policy on it, and the loss would be amortized by being re-distributed throughout the industry

because, you see, re-insurance companies take out their own re-re-insurance policies, and so on ad infinitum