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You'll have to read Paul Starr's The Social Transformation of American Medicine to understand the whole story, but here's my parable:

• In the US, since about the turn of the 20th century, health care financing has been about finding ways to make paying for the health care costs of hospitals and health professionals regular and predictable - rather than being principally concerned with supporting the ability of patients and families to pay some or all of their treatment bills. That latter issue has always been of secondary concern. It's always been a concern, just never the foremost concern.
  
  
  
• Health treatment has always been inherently conservative - "first do no harm", and all that. When they change at all, health treatment habits change slowly, as do their practitioners.
  
  
  
• We pay for health treatment transactionally - as if we were buying units of care off the shelf. Naturally facilities, and doctors, who "do" health care and want to make more money, do more procedures. The more procedures, the more payments. We don't buy health, we buy a knee surgery here, a bottle of blood pressure medicine there. "Of course we don't buy health, silly" you say - "we can't". So ask yourself; why not? Because it's not impossible, it's just that we just don't do it that way.
  
  
  
• Treatment of the most desperate, difficult cases takes serious resources, and serious skills. The most desperate cases are a very small share of the total - but they consume a very large share of all resources devoted to health care. This is America - we're good at addressing really tough problems. Remember the moon landing? Well, saving the lives of 1.5-pound babies, born at 22 weeks, are like mini-moon landings. Anyway, we find ways to tackle those really tough problems, to find resources to do it, and to fool ourselves that we can afford it, because that's what we do.
  
  
  
• But meanwhile we hate "taxes", and government, and bureaucracy - those aren't the American way. So we fool ourselves that our inefficient, wasteful means of gathering and deploying resources is the 'right' way, the pragmatic, "free market", "innovative" way to pay for health care - that our refusal to be systematic about acquiring resources to support our pretty highly capable health treatment facilities and clinicians makes "our" special, "exceptional" kind of sense. It would be funny, if it weren't so stupid.
  
  
• Taken altogether, we spend a lot more - 33 to 50% more - than people in other comparable countries do on "health", and we get no better health than they do for all our spending. We generally don't even get more health transactions - we just pay more for them. Mainly because that's how we do - that's our habit.
  
  But that still doesn't explain why health insurance* is so expensive, but now that should be easy to see. Health insurance is designed to pay some or all of a decently well-defined realm of possible treatment charges. It's not suited, mainly, to change how those procedures happen. It's a mostly passive follower of what gets charged, and while payers exert some pressure on care providers to moderate their ways, the pressure is feeble, and its motivations compromised.

I think this comic book does a good job of answering your question, if I'm understanding it correctly:

https://www.amazon.com/Health-Care-Reform-Necessary-Works/dp/0809053977/ref=sr_1_1?crid=7OH7RP0RNGW3&keywords=gruber+health+care+reform&qid=1570152048&sprefix=grouber+health%2Caps%2C159&sr=8-1

"Open Market" health insurance, if I'm understanding you right, is pre-ACA health insurance. Before the ACA (aka Obamacare) was enacted, individuals could purchase health insurance, but it wasn't easy or great coverage. Insurers were allowed to underwrite (i.e. set prices and/or deny coverage) based on a variety of things - it was nigh impossible to get health insurance if you had a pre-existing condition.

I was appealing a medical bill for someone back in the "open market" days who had been injured hunting. However, he didn't have health insurance to cover his care because nobody had been willing to sell him any because he was diabetic. In many states, it was impossible to purchase individual "open market" health insurance that would cover maternity services.

On the surface, when you could get it, it looked more affordable due to its lower premiums (which was easy to do since insurers could simply exclude sick people). But these policies often left people high and dry when they actually needed their medical costs covered.

I can't find this one article from several years ago that I was looking for, but this one from 2010 does an ok job of explaining what it was like: https://health.usnews.com/health-news/managing-your-healthcare/healthcare/articles/2010/03/11/dont-get-short-changed-by-short-term-medical-insurance