Senate blocks action on Medicare legislation

The Senate majority leader, Harry Reid of Nevada, needed 60 votes to proceed. He got only 47. And he could not blame Republicans. A dozen Democrats and one Independent crossed party lines and voted with Republicans on the 53-to-47 roll call.

The Medicare bill has become a proxy for larger issues in the debate over legislation to overhaul the health care system.

Reid said the bill, by averting big cuts in physician fees, guaranteed that doctors would continue accepting Medicare patients. But since none of the costs were offset or paid for, Republicans said it was fiscally irresponsible, and a number of Democrats said they shared that concern.

By addressing doctors’ fees in a separate bill, Senate Democrats could hold down the cost of the broader health legislation, keeping it within the limits set by President Barack Obama. House Democrats are considering a similar tactic. Republicans said it was a transparent ploy to hide the cost of a health care overhaul.

Democrats had hoped that by passing the Medicare bill they could appease doctors and secure their support for the broader legislation.

Senate Democratic leaders said the bill to protect doctors’ fees had strong support from the White House, the American Medical Association, and AARP.

Under current law, doctors face a 21.5 percent cut in Medicare fees in 2010, then annual 5 percent cuts for several years. Since 2003, Congress has stepped in to postpone such cuts, but it has usually found ways to offset the cost to the government.

The bill this year, sponsored by Senator Debbie Stabenow, a Michigan Democrat, had no offset and would have repealed the current cost-cutting formula, known as the “sustainable growth rate.’’

Despite the Senate vote, proponents of sweeping health care legislation moved ahead on other fronts.

At a meeting of the House Democratic Caucus, Speaker Nancy Pelosi indicated that she would push for a robust liberal version of a government-run health insurance plan, to compete with private insurers, if she could get the 218 votes needed to win approval in the full House.

An aide to the House Democratic leadership said Pelosi had told the caucus that she had 200 votes, “or a little over 200,’’ for this option, which would use Medicare rates as a basis for paying hospitals and doctors. Under another option, the government plan would negotiate rates with providers, as private insurers do.

Pelosi said the first alternative saved more money and would give the House leverage in negotiations with the Senate. But Representative Earl Pomeroy, a North Dakota Democrat, said he could not vote for this proposal because it would be damaging to his district and was likely to be dropped in negotiations with the Senate.

In North Dakota, as in many rural areas, Pomeroy said, Medicare rates are far below those paid by private insurers.

Both chambers agreed yesterday on one point: They want to revoke the exemption from federal antitrust law that health insurance companies have long enjoyed.

By a vote of 20 to 9, the House Judiciary Committee approved the antitrust change, which is likely to be included in the broader health care bill. It would outlaw price-fixing, bid rigging and “market allocations’’ by companies that sell health insurance or malpractice insurance.

Reid and the chairman of the Senate Judiciary Committee, Patrick J. Leahy of Vermont, said they would offer a similar plan as an amendment to health legislation in the Senate.

“Criminal conduct that would land people in jail in other industries is legal when insurers do it,’’ Leahy said.

The insurance business has been largely exempt from federal antitrust law since 1945. The Supreme Court ruled in 1944 that insurance was interstate commerce subject to federal antitrust law. But the insurance industry won a reprieve nine months later, when Congress passed the McCarran-Ferguson Act.

States regulate health insurance and have sued insurers for anti-competitive conduct. But state officials said they had received little help from the federal government.

Richard Blumenthal, the attorney general of Connecticut, said: “I feel strongly that the exemption should be repealed. It is a legal and historical anomaly that there is such a sweeping and all-encompassing exemption for an entire industry. It makes no sense as a matter of logic or law.’’