That requirement was imposed on insurers in response to already-exorbitant medical costs. It does create a perverse incentive, but it cannot be the root cause of the issue.
The exorbitant costs arose with the provision of private medical insurance in the 1940s but only really took off when Medicare and Medicaid came in the 1969s with, essentially, a blank check for cost.
Things weren't improved in the 1980s when emergency rooms were required to provide care regardless on a patient's ability to pay, leading to another perversion that for a significant group of people the only way to get medical care was when it was too late and most expensive.
ACA is just another example of the US government doing stupid.
Note that this changed in 2022 for the most-bought drugs.
https://www.cms.gov/newsroom/fact-sheets/medicare-drug-price...
Too bad the hospitals don’t figure out some way of providing preventive care to the uninsured to reduce these costs.