This is why it's ridiculous that the US Affordable Care Act (Obamacare) "caps" profit for health insurers as a fraction of premiums collected. It provides a direct incentive for them to increase healthcare costs, absolutely the opposite of what government policy should be doing.
The issue is that without the caps, the insurance companies would be much more motivated to deny lots & lots of claims. Imagine you're a regular person with a middle-class income, you urgently need treatment and the insurance company algorithm says 'denied' because they're simply saying 'no' to x% of claims that week. What are your options? Litigation? Yes insurance companies have regulators, but the sheer scale of denials would start to overwhelm them. At a huge scale, this would degrade the quality of American healthcare even more. It would become normal for legitimate claims to be denied all the time.
Anyways, this was the explicit reasoning of the ACA drafters when they included the profit cap. Maybe they were wrong, but this was thought about & discussed a great deal at the time
To give some color: there were a large number of (small) insurance companies that were paying less than 50% of their revenues in actual medical payments. In those cases most of the costs were in bonuses to the executives. This was a measure to kill of those (which it did). Now we are left with somehow controlling the excesses on the other side.
