The brain tumor came back. An ugly mass growing in plain view threatened Karen Niles' remaining eye. She needed more surgery.

This time, however, her medical plan wouldn't pay.

It sounds like one of those insurance "horror stories" that President Obama hammered home during the fierce debate to pass his health care overhaul. Except Niles' plan ended up as the beneficiary of a rare exemption to the new law -- a waiver highlighted in the plan's promotional materials.

The plan didn't come from an insurer, but from a religious "health care sharing ministry." Consumer advocates call them a gamble.

These plans successfully lobbied Democratic lawmakers to free their members from the requirement that everyone in the country have health insurance.

"Christians are exempt from insurance mandates," Niles' old plan, Medi-Share, says on its website. Sharing ministries are "the only organized health care concept to receive a special exemption from the taxes, penalties and regulations" that the law imposes on insurers, the site says.

Medi-Share members affirm a statement of Christian beliefs and pledge to follow a code that includes no tobacco or illegal drugs, no sex outside of marriage, and no abuse of alcohol or legal medications. Every month, they pay a fixed "share" to cover the medical expenses of members in need. The cost usually is less than private insurance, but it's not tax deductible. Members use a network of medical providers.

If that seems close to regular health insurance, it's not, says Michael McRaith, the top insurance regulator in Illinois. "We have seen individuals who buy into a sharing program believing they are paying for a promise, and in fact that is not what they are receiving," McRaith said.

"There is no promise or certainty this sharing program will pay for health care expenses," he said.

Florida-based Medi-Share says it's faithfully helped members pay medical bills for more than 17 years, based on a Bible verse: "Carry each other's burdens, and in this way you will fulfill the law of Christ."

"It accomplishes some of the same purposes of health insurance," said Medi-Share's president, Robert Baldwin. "There are also a lot of contrasts ... first and foremost, the biblical basis: Members pray for one another and are prone to encouraging one another."

Karen Niles' husband wouldn't recommend it to anybody. "They have done their damage on me and my wife," said Robert Niles, a leader and teacher in his small-town Oklahoma church. Medi-Share's Baldwin blames state regulators for the Niles' misfortune.

Robert Niles said he found out about Medi-Share from a brochure a relative picked up on a church retreat. He had changed jobs and needed insurance. "Everything they said sounded good, so I filled out an application," said Niles, now 67 and retired from a career in sales. They joined in 2003. Their monthly shares, or premiums, ranged from $450 to $500.

It's unclear how many people belong to sharing plans, maybe about 100,000. Medi-Share is one of three main ones, with about 40,000 individual members. Members tend to have modest incomes; many are self-employed.

Each plan has its own rules and track record. Although they have procedures for dealing with coverage disputes, they're largely unregulated by state insurance departments that oversee private carriers.

At first, the plans feared Obama's health care overhaul could put them out of business. Pressing toward a goal of coverage for all, Congress was considering a requirement that everyone in the U.S. carry health insurance. Medical bill sharing is not insurance.

The plans formed the Alliance of Health Care Sharing Ministries, hired lobbyists and approached the Senate Finance Committee and the Senate Health, Education, Labor and Pensions Committee, which were writing much of the legislation. Finance Committee spokeswoman Erin Shields said lawmakers granted the exemption out of respect for religious freedom.

"We wanted our members to at least be able to keep participating in the programs," said Medi-Share's Baldwin. "Down the road, I believe that it would increase membership, depending on what happens to insurance costs."

Illinois insurance regulator McRaith says Congress should attach more safeguards to the exemption, such as requiring sharing programs to have capital reserves deep enough to handle unusually expensive cases.

If Medi-Share is an insurance alternative, its guidelines carry an eye-catching disclaimer:

"The payment of your medical bills through Medi-Share or otherwise is not guaranteed in any fashion." Members remain solely responsible for payment.

Sobering language in these days of runaway costs, but several plan members said they had no major problems getting coverage to treat costly life-threatening conditions.

Meredith Crumb of Lafayette, Colo., reckons that Medi-Share paid hundreds of thousands of dollars to treat her leukemia, now in remission.

"I found it by word of mouth in the Christian community," said Crumb, 50. "I had top-notch care."

She worries what would have happened to her if she had to rely on government-regulated coverage. "I know with my medical conditions, if I lived in Canada or Europe, I'd be dead," she said.

David Dacy of Austin, Texas, said Medi-Share paid tens of thousands of dollars for his wife's cancer treatment and for surgery to correct their daughter's deviated septum. He was skeptical when he first heard about Medi-Share, but signed up partly out of frustration with private insurance.

Through the years, Dacy said his family had difficulty with the plan just once, over his daughter's care. But Medi-Share paid. "It wasn't really a battle, but more effort than I thought was necessary," said Dacy, 55, an actor and private investor.

Others have had problems. Nevada pastor Michael Rowden sued Medi-Share over its refusal to pay for treatment of a heart condition. He eventually reached a settlement. "I was actually embarrassed to be associated with them," he said.

Before Karen Niles became incapacitated, she was a homemaker and a church volunteer in Blackwell, Okla. Medi-Share initially paid for treatment of her brain tumor, but in 2008 told the couple it could no longer continue to do so. The reason given was that Oklahoma state regulators had ruled Medi-Share was an insurance company operating outside the law, and ordered it to stop operations.

"None of us wanted anything to happen to Karen Niles," said Medi-Share president Baldwin, adding, "if a state tells us we can't operate in a particular state, we can't operate." Medi-Share had already paid more than $450,000 for Niles' care.

The Nileses sued, alleging the real problem was that Medi-Share did not have the money to pay for Karen's treatment. Medi-Share denies the charge.

The Oklahoma insurance department said Medi-Share could still pay claims, notwithstanding its order. "There is nothing currently prohibiting Medi-Share from paying medical expenses at this time, other than their business decision not to pay them," the department said in a 2009 statement.

The Nileses and Medi-Share agreed to binding arbitration to settle the suit. Arbitrators ruled last year in favor of Medi-Share, in a 2-1 decision.

"We may agree to disagree on the moral question, but the legal question was decided in our favor," Baldwin said. Karen Niles was able to get emergency surgery by joining Oklahoma's high risk health insurance pool, coverage of last resort for the medically uninsurable. The premiums, however, were about three times higher than what the couple paid Medi-Share.

Karen has since turned 65 and joined Medicare, and is under hospice care.

"I'm not saying this wouldn't have happened if she had that surgery," said husband Robert. "I couldn't prove that. But I think by waiting so long, it really did some damage."