Often (in the UK at least) if your insurance is provided as a benefit through a company rather than buying your policy directly, pre existing conditions will be covered even though the provider would normally exclude them if purchased by an individual.
Typically this is because they are able to make decent generalisations about the total risk pool they are insuring.
Offering 100 policies at £100 makes sense if you can make a decent estimate of the average annual payout being £90. The fact that one guy walks in to the policy knowing he'll cost £500 doesn't concern you.
Offering 1 policy at £100 without any exclusions means that you get adverse selection - a unusually high proportion of your clients would walk in knowing that they'll cost the £500.
In many countries where health insurance is obligatory, regulators have risk pooling between insurers to help negate selection effects (I think this was included in ObamaCare provision but not sure)
