Again, you're focused on insurance market competition and not on healthcare competition.
The insurance market is selling insurance to individuals.
The healthcare market is selling healthcare to patients.
The interaction between healthcare and insurance is that patients are less-accessible to healthcare providers if those providers don't provide rates to those patients which are competitive with the rates other providers provide; and that insurers engage in group negotiation on behalf of the insured.
That means healthcare providers are competing for patients when they negotiate with the insurance providers. The patients are paying healthcare providers to act as effective negotiators for them, and backing them with their patronage. If the healthcare providers don't negotiate a good deal with the consumer via their elected arbiter (insurer), then the consumer goes to someone who did negotiate a good deal with them; and we call those people who negotiate deals "in-network providers".
They also have very little reason to worry about competition since health markets tend to be very regional
So what? Nearly half of all providers are out of my care network. They're excluded from my healthcare options because they cost me three to ten times as much. If the hospitals, doctors, psychiatrists, and pharmacies wanted my business, they should have signed on with CareFirst's BlueChoice PPO network and CVS Caremark's Pharmacy Benefits Manager. I've got out-of-network providers charging me $1,079 for things my insurance won't cover, at all; my in-network providers have negotiated a rate of $101, refuse to cover it, and so I have to pay the whole $101 out-of-pocket. Guess who I go to for doctor's services, prescriptions, and drugs?
ACA has guaranteed their profit to be capped to a percentage of premiums
That's actually a constant, and it doesn't much matter if you don't have customers. Let's take a look before the ACA.
A great many insurance companies have operated as NPOs for decades. Healthcare Services Corporation is a customer-owned for-profit insurance company--the same way a Credit Union is a customer-owned bank--with 15 million customers. CareFirst Blue Cross formed as non-profit in the 1930s, and considered (but didn't go through with) converting to a for-profit entity in 2001. Most Blue Cross and Blue Shield association members are NPOs or customer cooperatives.
Because of the NPO status of most insurers, they operate largely on carry-over and can't distribute profits in giant bursts to board members. Essentially, NPOs pay no taxes on profits; and the IRS may revoke your 501(c)(3) status if you generate too much profit and don't spend it in pursuit of your NPO-eligible business activity. For an insurer, that means you have to spend your profits maximizing the effectiveness of your insurance.
For example: CareFirst's CEO, Chett Burrell, got $2.5 million in salary and incentive pay in 2013; in 2014, CareFirst had an $865 million surplus, which prompted the city of DC to investigate whether CareFirst DC had a compelling need to float that much cash. In 2015, CareFirst was ordered to spend $268 million of this surplus to pay for public health services in DC, Maryland, and Virginia, including wellness programs, free clinics, public vaccination programs, and so forth. If CareFirst doesn't reduce its excess holdings or simply starts liquidating them via $13 million dollar executive bonuses each year, the IRS can revoke their 501(c)(3) status and make them pay 40% of their profits (that means $350 million of that $865 million) in taxes.
How does that tie profits to premiums?
In this situation, as you observe, CareFirst's profits are reliant on their premiums: if they have higher costs, they can charge higher premiums; and if they have to charge higher premiums, they have to carry over a larger surplus to cover for risk. Adverse risk events would easily take down an insurer who didn't carry over enough money to pay for sudden, unplanned costs; the size of those events scales with the size of costs, meaning rendering the same services at half the cost allows you to secure yourself with half as big a bank account in reserve.
Thus, as you point out, bigger premiums means you can carry over more money, taking more profits, and paying bigger executive bonuses without drawing IRS scrutiny. You still can't pay dividends--unless you're a customer-owned cooperative, in which case you can pay dividends to your customers (including yourself).
The other side of this is you need customers in the first place.
ACA or not, "a percentage of your premiums" only matters if you actually manage to charge premiums. If your customers go on the exchange and see your shit-level plan for $800/month and a silver-level plan for $235/month, they're going to buy the silver-level plan. Insurers have an incentive to draw customers so they can keep a percentage of those premiums as profit.
The only way to get those premium prices down is to get costs down. To get costs down, you must get the healthcare providers to lower their prices. Healthcare providers can lower prices until margins make a sustainable profit, but no lower; to get lower, they must lower costs, which means medical devices, drug costs, and the efficiency of treatments (labor time spent) must go down. Turning a 27-hour surgery with 6 weeks of in-patient care and 4 months of follow-up into a 35-minute outpatient procedure really cuts down the amount of wages paid to doctors, nurses, and staff. We pretty much spend all of our time researching medical technology to cut those costs back in that way; less-traumatic surgery tends to go hand-in-hand with fewer complications and greater patient outcomes.
You can only disconnect competition from the healthcare insurance market by ignoring half of the stuff actually going on. You have to ignore insurance customers, or you have to ignore healthcare providers. If you include customers, insurers, and providers, you can only identify a highly-competitive market.