The market crashes without the individual mandate, because hospitals still treat people without insurance, it’s just far more expensive, and doesn’t get paid for, so the hospital eats the cost. So, without the mandate 1) health insurance companies don’t get the income from relatively healthy people, which subsidizes people who aren’t, and 2) Insurers have to raise prices on people with insurance, because hospitals have to treat people anyways. The hospital raises prices, thus the insurers have to raise prices, thus premiums go up on people that do have insurance. In addition, this allows insurers to insure people without concern for pre-existing conditions, because this way they can’t wait until they get sick and then buy insurance the next day.
Probably less fiscally impactful, but still important, is the fact that people with insurance tend to get pre-emptive care, which is far cheaper than waiting for an emergency (in addition to being far better for your health).
Basically, if insurers can’t make insurance profitable, they’ll leave the market, and if they leave the market, the “bottom falls out.” Getting rid of the individual mandate significantly increases the likelihood of that. If you’d like a government option, as opposed to the market, that’s fine. Personally, I’m all for a public option with subsidies, so that everyone has access to a reasonably priced plan. But, if you’re relying on private options for many people, than the individual mandate is an integral part of the system.
There’s some truth to the idea that if you get rid of some of the requirements for coverage, then people get cheaper plans, but they wouldn’t cover much, and people would, again, be screwed if they end up in the hospital, which is always a possibility, and, as I pointed out in the beginning, leads to higher insurance premiums.