The weren’t allowed to - not even the fair plan was charging sound actuarial rates. Cali put price controls on insurance, making this debacle inevitable.
No matter what anybody’s intentions are, they always end up creating market distortions that eventually lead to more societal issues than the ones they’re suppose to alleviate and it’s just bad economics that shouldn’t even be a tool in politicians’ (or voters, but ballot box lawmaking should be illegal too) toolboxes so they’re forced to address the upstream concerns that cause prices on land, housing, rents, services and goods to climb to the point of being unaffordable to most of the population.