No, their net income margin is capped at 20% (well, technically their total administrative expenses are capped at 20%). Their total valuation is mostly a multiple of total net income, which is driven by higher revenue. New upstarts are probably looking to operate at a lower margin anyhow (similar to other growth-oriented companies e.g. Amazon) to achieve higher valuation from revenue growth.

It's quite clear that the insurers are aggressively trying to control costs when you consider that networks on exchanges are extremely narrow and denial rates are actually pretty high - IIRC nearly 1/3 of claims are initially denied for ACA plans.

These companies are also bringing the narrow network model to the small and large group markets too, where utilization review is also quite aggressive and has been for a long time.

It basically works out like textbook oligopolistic competition models where the Nash equilibrium resembles a prisoner's dilemma. For companies to increase "total market size" by allowing costs to balloon would require unusual collusion and there's no evidence of it.