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A story from the health-insurance crunch

Leslie Banks writes novels about vampires and werewolves. So far, she hasn't cast any health insurers as villains. But Banks is tempted, she acknowledged yesterday, after a brief trip into the national spotlight pointed at health-insurance reform.

Leslie Banks writes novels about vampires and werewolves. So far, she hasn't cast any health insurers as villains. But Banks is tempted, she acknowledged yesterday, after a brief trip into the national spotlight pointed at health-insurance reform.

The West Philadelphia author introduced President Obama at Arcadia University with a story about a choice she recently faced when her health insurer, Independence Blue Cross, notified her that her premium would double if she wanted to maintain similar insurance coverage.

As a diabetic, she needed the protection. But Banks could not afford to pay the higher premium and also cover her 19-year-old daughter.

"Folks who work hard, play by the rules, pay their taxes, and live within their means shouldn't have to make these kinds of horrible choices," Banks said before Obama took the lectern.

Banks' appearance also turned a national spotlight onto premium increases of up to 75 percent that took effect this month for 27,000 Independence Blue Cross policyholders who, like Banks, buy Personal Choice insurance directly rather than through their employers. (Because premiums also rise with age and Banks just turned 50, her costs more than doubled to $659 a month.)

Since last month, Obama has focused on similar increases in California and elsewhere as evidence of the need for a health-care overhaul. California's Anthem Blue Cross recently raised premiums as much as 39 percent on California customers who buy individual policies.

"Anybody's paycheck gone up 40 percent?" Obama asked the Glenside crowd yesterday, getting a chorus of "no's" in response.

Insurance experts say the differences between the Anthem and Independence Blue Cross situations reflect variation in how states regulate insurance premiums and coverage.

California regulators were unable to stop the Anthem increases - a problem Obama proposes to remedy by setting federal standards for premium reviews and giving federal officials backup authority to review rates.

By contrast, Pennsylvania regulators were initially able to limit the Personal Choice increases. Last year, Blue Cross proposed raising the plans' rates in July as much as 58 percent, but they were held to smaller increases because Pennsylvania regulators can review rates.

Still, both states' individual policyholders face similar pressures, according to Pennsylvania Insurance Commissioner Joel Ario.

In both, individual policyholders have suffered as rising premiums push healthy people to drop coverage, leaving the pool of those still insured less and less healthy - a so-called death spiral.

Pennsylvania regulators and Blue Cross officials both said the Personal Choice plans were increasingly unaffordable in part because of their status as "guaranteed-issue": policies that Blue Cross agreed to offer to anyone despite preexisting conditions such as Banks' diabetes.

According to "medical loss" data filed with the Insurance Department, Blue Cross lost money on the plans in three of the last four years and barely broke even in the fourth. In 2008, for example, it paid out $1.11 in benefits for each $1 it collected in premiums.

Ultimately, Blue Cross decided to cancel the three Personal Choice plans it had offered for two decades and replace them with two new plans, a decision regulators said they were unable to block.

To keep similar coverage, some policyholders faced premium increases of up to 75 percent. To keep a similar premium, the only option was a plan linked to a health savings account and carrying deductibles of $5,000 a year for individuals and $10,000 for families.

With the new rates, Banks said she faced a disturbing choice: Should she let her coverage go and cover her daughter, or should she keep up her own coverage as the family breadwinner? She said she feared a catastrophic illness "would wipe out everything."

Ario, who joined Obama at Arcadia yesterday, said the president's plan would address the problem with a trio of strategies to broaden and deepen the insurance pool: mandating coverage, subsidizing premiums for those who can't afford them, and giving individuals access to insurance exchanges that share risk among the healthy and the sick, as large employers' policies already do.

Ario said the current trend among insurers was heading in the opposite direction, "with insurers seeking ever wider premium variations between the best and worst risks."