"I can't make sense of [your description of adverse selection]."
.
Let me help you out: In the vast majority of cases, there is no way for an insurance company to tell whether they are taking on someone who is high risk, and someone who is low risk.  They can check for age, tobacco use, etc. but in most cases, the person seeking insurance knows much more about their risk than the insurance company does.  THAT is called "adverse selection." An insurance company KNOWS they are inadvertently taking on policy holders who are high risk, and adjust everyone's policy cost up to account for this.
.
Government comes along, and demands that insurers cover everyone, regardless of risk, and sets their prices! This absolutely decimates the market, and insurers walk away rather than be forced to cover someone. The ones left over (see: Obamacare) reduce their coverage and make the policy so astronomically expensive for everyone else that it breaks everyone's bank account.  This is absolutely ECON 101