Why can "insurers" deny people healthcare insurance?

Christy Hardin Smith at firedoglake:

[T]here have been increasing questions about health insurance companies who abruptly cancel insurance coverage for people with chronic health conditions. A few weeks ago, the WSJ had a profile of a woman with lupus whose insurer informed her that she would no longer receive health coverage because she was sick and it was costing them too much money. That is a far cry from the reason that health insurance pools were formed originally — to spread risk across a larger pool of people to ensure that the most at risk were able to still receive adequate health care.

The follow-up letters to the editor in the WSJ run the gamut of political positions and personal thought — but ultimately the questions come down to this: is the purpose of health insurance to provide health care to everyone who pays into the system, and to spread risk across a broad pool of Americans... or is its sole purpose to maximize profits for insurance companies?

This is yet another reason why the free market is simply a bad fit for healthcare (also see here and here). Insurance companies have figured out that they can maximize their profits by insuring only healthy people, thus collecting lots of revenue in insurance premiums while paying out very little in claims. This arrangement is what's financially best for them. But the purpose of a health insurance company is to provide health insurance to people. In theory, the market's "invisible hand" should lead insurers to do what's best for everybody. But in reality, Americans with serious health problems get the "invisible finger" and are denied coverage when they need it most.