I think you are missing the forest for the trees.
There is no issue with risk pools being fine-grained. The issue is that low-risk (and even no-risk) things are included.
Are you at "risk" of a yearly physical?
The point of insurance is supposed to be that if something unlikely and expensive happens to you, that you arent out the cost of that unlikely and expensive thing. There is value in knowing that you will not have to sell or lose your house if something unlikely and expensive happens to you, enough value in it that a middle man can also profit. Its win-win in these cases.
Its not win-win when you have to pay that middle mans cut for non-risky things like that yearly physical. This is true when the middle man is an insurance company, but it is also true when that middle man is a government or some powerful government-corporate hybrid entity that can force you into giving them a cut.
In the case of auto-insurance, if you own your vehicle then you are only forced to get insurance for unlikely and expensive things, and only when those things can happen to other people while you are driving. Routine maintenance simply is not mandated because it used to be that people were smart enough to know what insurance was for and wouldn't let the government pull that sort of shit.