It depends on the line of business but basically an insurance company wants to charge you a rate that will cover the average loss you will incur plus expenses plus a decent profit margin. That is a very efficient way to do things.
The difference in the example above is that nobody is subsidized and all costs are provided by insurance companies. The government has very little input into the process. Your taxes don't go up to help anyone in the direct market get insurance and your rates don't get inflated to help someone else.
The downside of this free-market approach is that some people are too poor to afford insurance and some people are to unhealthy to get insurance. Nobody wants this.
What is happening today is that we are getting blessed with a wonderful new healthcare system and most have no idea if we can pay for it. And our government has a very bad track record of being honest about the true cost of things or acting frugal in general
This is true in the individual market but not in the exchanges where they are using community rates.
With community rates the younger people absolutely subsidize the older people.
Early in the process the original bill stipulated that you had to buy insurance through the exchanges, but it was later changed to give an option of using the exchanges.
Probably was a mistake.