LONGVIEW, Texas -- In June 2003, Shirley Loewe went to Good Shepherd Medical Center here with a softball-size lump in her breast and was diagnosed with a rare form of breast cancer. She didn't know it, but she had just made a big mistake.

Ms. Loewe was uninsured. Under federal law, she could have gotten Medicaid coverage -- and saved herself a lot of hardship -- if she'd gone to a different clinic less than a half-mile away. But by walking through Good Shepherd's doors, Ms. Loewe unwittingly let that opportunity slip and embarked...