The second group may be unprofitable with lower payments, but the insurer doesn't even want the second group, the profits are from decreased expenditures on the first group.
I’m not arguing those other conditions shouldn’t exist, but rather making the weaker, more limited argument considering “given the arrangement of the insurance market as it exists today, what should the price for that insurance offer be?” In other words, “What should a for-profit insurance company do, acting on their own and immediately?” because I think that’s pretty close to the question they’re facing when setting pricing for individual plans.
I think you’re arguing that perhaps health outcomes should not be funded by private for-profit insurance companies and I’d agree, but while it is, this outcome seems grounded in actuarially sound math.
Is Y’s behavior being on average healthier and therefore less costly to insure?
That's a general complaint that has nothing to do with insurance being a cost you pay out of your take-home salary in the US.
Your anecdote seemed to be predicated on an accounting difference between the US and Canada, that the Chinese supposedly didn't know about. I'm saying that doesn't really exist. The sort of people who adopt would have a job with insurance, but the price of the insurance would not be included in their salary.
In my lifetime, I have been uninsured, insured by my employer, on an ACA (Obamacare) plan, etc. But never been in the situation where I was making a good salary and paying full price out of it for a health insurance policy, like people do with car insurance. Nor have I ever known anyone who did. Of course, somebody probably has, somehow, but it's not common, let alone a norm that some government would assume.