Let's assume your worst case scenario. Data is sold directly to insurers.

Unhealthy people pay more (kinda fair don't you think?). Healthy pay less. Some have additional motivation to get healthier, because "screw the old me, I don't care about that looser... but if I move a little I can pay less now? Tell me more!"

Average society healthiness increases. Even worst scenario is great.

> Unhealthy people pay more (kinda fair don't you think?)

Depends. You can be unhealthy through no fault of your own (genetics, environment). From social utility POV, insurance is about pooling risk. Taking your scenario to the limit, if insurance company is able to compute an accurate risk factor for everyone and adjust premiums accordingly, then the risk pool evaporates. But then again, maybe health insurance shouldn't really be a private industry.

Insurance still works even if insurer knows exactly how probable is given outcome and how much exactly will it cost and adjusts the fee to that. People don't insure themselves because it's a good deal. They do it because they know they won't be able to survive financial burden of some rare event that most likely won't happen but they need to be sure that in the case it happens they'll be covered. And they are willling to pay for that.

Risk is still pooled because payouts come from fees of the people that didn't (and won't) experience costly events themselves.

More information just makes the business more just and less random for insurer.