Combining guaranteed-issue with an individual mandate may make the actuarial math work out profitably for a lot of scenarios. It would never happen in a free market--the marginal cost of accepting someone with preexisting conditions already exceeds the marginal revenue--but if each insurance company has to take on enough healthy people for each sick person they can still profit.

No system is perfect. I think there are a lot of pieces of reform that have been proposed that would be an improvement, though.