Like a lot of self-employed people, Valerie Scaglione and her husband, Michael, who run two businesses from their home outside Auburn, find themselves in a significant health insurance crunch.

Monthly premiums for Blue Cross coverage for them and their three daughters have soared over the years to almost $2,000, Scaglione says.

She estimates that in the past six years, the family has spent more than $140,000 on premiums and co-payments.

Yet when she tried to switch from the family's expensive individual insurance to a Blue Shield group plan that's more affordable, she said, she and her oldest daughter were denied coverage. She said neither of them has the medical conditions that were listed as reasons for being denied bronchitis and a skin ailment.

"I have three children," said Scaglione, 47. "We have to have insurance. Stitches may be required. A broken bone may have to be set. We have no chronic diseases. We're a normal family. This is crazy."

Consumer advocates consider their story emblematic in many ways of complaints that plague the entire health insurance industry.

"We've seen people denied for things as minor as heartburn," said Anthony Wright, executive director of Health Access California, a statewide health advocacy coalition. "It gets to the point where living is a pre-existing condition.

"The system is fundamentally broken if insurance can be denied to anyone who actually needs coverage."

The Scagliones moved a decade ago from Los Angeles to Lake of the Pines, a community of wooded lots and winding roads. Michael, now 51, established a fishing tackle manufacturing business, while Valerie set up an online marketing company. Their 13-year-old daughter, Samantha, attends Magnolia Intermediate School. Twins Nikki and Kylie are 6.

"Our health insurance costs three times our mortgage," Valerie Scaglione said. "That's crazy."

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