IIRC, the ACA has stipulation that 80% of premiums must be spent on medical services, so...a larger spend -> increased premiums -> a larger 20% piece of pie they can keep.
That's true, the minimum MLR creates a distorsion to the incentives.
[Gross oversimplification] Nope - insurers are incentivized to pay as little as they can get away with. Which leads to healthcare providers being incentivized to bill the insurers as much as they can get away with. They'll meet somewhere in the middle.