Oct. 15 (Bloomberg) -- Democrats in the U.S. House and Senate are moving to shore up support from two important constituencies, labor unions and doctors, as the lawmakers seek to craft compromise health-care legislation.

Senators said they plan to ease a proposed tax on high-end insurance plans after unions protested that it would hurt too many workers. Lawmakers may also shield doctors from the threat of cuts in payments from the Medicare program for the elderly.

Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi are working to combine different versions of legislation designed to curb medical costs and increase health-insurance coverage. The criticism from unions, the Democrats’ biggest financial backers, has them worried.

“We have to be careful,” Richard Durbin of Illinois, the Senate’s No. 2 Democrat, told reporters yesterday. “We don’t want to see our friends in labor not supporting it.”

Lawmakers also are wooing doctors, whose Chicago-based American Medical Association trade group has backed the overhaul so far.

Reid put legislation to avert a 21 percent drop in Medicare reimbursements of doctors in January on a fast track. The measure proposed by Michigan Democrat Debbie Stabenow would repeal the reimbursement system, which was designed to save money on Medicare by ratcheting down payments to doctors.

Reid, a Nevada Democrat, invoked rules to bypass committees and bring the measure right to the floor. Today, he scheduled an Oct. 19 vote to start debate on the measure, a motion that requires the support of 60 senators.

No Spending Increase

The so-called sustainable growth rate system sets yearly and cumulative spending targets. If spending exceeds that year’s target, reimbursement rates are to be reduced. For seven years, Congress has enacted temporary fixes putting off the cuts, Stabenow’s office said in a statement.

The doctor-fee measure wouldn’t add to the cost of the health-care overhaul because “it does not increase spending,” Jim Manley, a Reid spokesman, said in an e-mail. The legislation “simply restores a more honest picture of what future physician spending will actually be.”

Doctor Complaints

Physicians have complained that the Medicare repayment rate underpays them. As a result, many no longer see Medicare patients, leaving seniors in some areas struggling to find health-care providers. The $829 billion Senate Finance Committee plan had a one-year fix for the doctors.

House leaders are considering similar relief.

“Health-care reform really needs to be considered on its own merit” as does legislation for changing the formula adjusting doctor payments, House Democratic Leader Steny Hoyer of Maryland told reporters yesterday.

Republicans seized on the news, telling reporters that Democrats were trying simply to shift costs out of the overall health-care legislation.

Senate Minority Leader Mitch McConnell of Kentucky called it a “transparent” effort by Democrats to deduct the doctor- reimbursement cost “so they can say their trillion-dollar health-care bill is paid for.”

House Minority Leader John Boehner of Ohio said “there is going to be a bigger fight over this than most people think.”

Cost Concerns

Several Democrats said they were concerned about the cost as well, which may complicate Reid’s effort to pass the legislation.

Kent Conrad of North Dakota, chairman of the Senate Budget Committee, told reporters that lawmakers need to come up with a way to make up the money that would be spent on the payment fix, as well as address other issues adding to the national debt.

“It is absolutely essential that we have a comprehensive process to deal with the burgeoning debt,” Conrad said.

Democratic Senators Ben Nelson of Nebraska and Evan Bayh of Indiana said Congress should find a way to pay for fixing Medicare reimbursements. Bayh said he would oppose the measure unless the cost were offset by savings or revenue.

Congress is trying to “reform health care in a way that’s fiscally responsible and doesn’t drive up the deficit,” so “a vote that will increase the deficit by $245 billion violates that principle,” Bayh told reporters.

‘Get This Done’

Proponents couldn’t find ways to offset the cost “that people could agree with,” and decided to seek Senate approval anyway because “we need to get this done,” Stabenow told reporters. The Michigan senator said the legislation has White House support.

The revamp of the health-care system gained momentum this week when Maine Senator Olympia Snowe became the first Republican to support a plan. She joined the finance panel’s 13 Democrats to approve legislation on Oct. 13, guaranteeing herself a place in further negotiations.

The vote “has brought energy to the process,” White House Chief of Staff Rahm Emanuel said yesterday as he left a meeting with Pelosi. Earlier, he and other White House officials met with Reid, Senate Finance Committee Chairman Max Baucus and Connecticut Senator Chris Dodd, the chief negotiator from the chamber’s health panel, to discuss melding the bills.

Manley said the conversations will continue next week.

Taxes vaulted to the top of the agenda yesterday after 27 unions announced their opposition to the finance panel measure in a full-page newspaper advertisement. The unions said they would urge their members to seek its defeat in the Senate unless “substantial changes” are made.

Cadillac Tax

The proposed 40 percent excise tax on so-called Cadillac insurance plans would begin in 2013 and affect insurers of employer-sponsored health plans with benefits exceeding $8,000 for individuals and $21,000 for families. Those thresholds would be $9,850 and $26,000 for retirees 55 and older and for employees in the coal mining and other union-heavy industries.

Durbin said he expects the thresholds to be raised, and Baucus said he is “absolutely” open to that. The provision would bring in $201 billion over 10 years to help pay for the legislation, according to the Congressional Budget Office.

Taxes are just one of the issues dividing Democrats as they seek to make the biggest changes in the U.S. health-care system in more than four decades. Lawmakers are also grappling with whether to require that employers cover workers and whether to create a government-run insurance program that would compete with private insurers such as Indianapolis-based WellPoint Inc.

Pelosi today told reporters that the House may consider assessing fees on the health insurers, a plan already included in the Senate finance panel legislation. She also said there’s “tremendous enthusiasm” for repealing the industry’s antitrust exemption, an idea also under consideration in the Senate.

“It’s clear where the problem has been,” Pelosi said of insurers.

To contact the reporters on this story: James Rowley in Washington at jarowley@bloomberg.net; Kristin Jensen in Washington at kjensen@bloomberg.net

Last Updated: October 15, 2009 16:35 EDT