how can I lower my insurance costs

My husband and I are self-employed. We own our own business and therefore do not have the benefit of group insurance policies. The only thing we could do is apply for an individual plan. Rates are sky high, especially considering we are both overweight. I have to thank God neither of us are smokers! Anyway, our family premium (we have three kids) was $850 per month as of today. However, we just got notification by mail today that as of next month our monthly premium, should we decide to continue would be $1,008 per month! I gasped in horror when I read it and dh looked at me as if I had seen a ghost.

In this poor economy, when our income is only about 50% of what it was in recent years, we struggle to fathom how we can continue being the recipients of health insurance! As it is, we have a $3500 deductible, and not all of the services we get are covered. So, before the insurance company would pay a penny, we would be out $13,700 ($850 x 12 months plus $3500 deductible).

Hubby just got off the phone with the insurance company and their suggestion was to go up to a $10,000 deductible and then our premiums would be $489 per month. So, if we take that offer, we would be out $15,868 per year if we were unfortunate enough to meet our deductible.

Fortunately my entire family is healthy and has no pre-existing conditions. We do not plan on having any more children (our surprise sweetheart born in 2008 came via c-section and we thankfully did have our insurance at that point) and the older kids are not yet of age to participate in full-contact high school sports.

I don't know what we are going to do. Considering we are healthy, I'm wondering if the monthly premiums we'd save by cancelling our insurance would more than pay for the preventive exams and well-child care and immunizations.

We are careful and cautious and have always maintained insurance as responsible members of society. What have others done? When budgets just do not allow, has insurance been one of the expenses you've decided to let go?