> but in this case that's not a concern

Why? It seems that if premiums are rising relentlessly for one company that the insured will seek out other companies, and hence that one company will "lose the customer".

Or am I missing something?

Its safe to assume that it was obvious to everybody involved. And therefore was quid-pro-quo for passing ACA.

It's right up there with excess taxes on gambling and tobacco. Governments become dependent on those excesses and are disincentivized to decrease the activities they're ostensibly trying to lower.

> excess taxes on gambling and tobacco

You may be mishearing the term "excise tax". An excise tax is a tax on any specific good, such as tobacco or gasoline. Those taxes are included in the cost of the good (it just costs more at the pump or on the shelf). Yes, they are typically used to reduce consumption, or to pay for costs associated with consumption (eg roads).

I'm aware of what excise taxes are, but I see why it might seem like that's what I meant, because I wasn't really explaining what I meant by that phrase. By "excess tax", I mean taxes in excess of the cost of the behavior they're trying to regulate. Both of these examples are both excise taxes, the rates of which are in excess of the costs borne to society of those activities.

Disincentivizing taxes are usually very profitable, because they're targeting goods that are considered overly desired. Their effectiveness is not too clear, but it is commonly accepted that they do reduce consumption. For example, a recent study on soft drink taxes concluded that retailers absorbed half of the extra cost to keep consumption high.

An alternative income source might be luxury taxes. There are a number of luxuries where consumption correlates positively with price - but it would be politically difficult to implement a tax on extravagance.