re: Is insurance that covers pre existing conditions really insurance ?

Sure. You just have to design it properly.

There are two mandates for a properly designed pre-existing conditions clause:

(1) Deter rent seeking. You don't want people who are healthy to deliberately forgo buying insurance to save the premiums only to buy it after they get sick.

(2) Protect people who have coverage and for whatever reason lose coverage (job loss, job change, etc) who are already sick from being kicked to the curb.

It's quite a simple thing to do, really.