Nov. 7 (Bloomberg) -- House Democrats moved to clear one of the last hurdles to a historic debate on legislation to overhaul the U.S. health system, agreeing to a demand by 40 lawmakers to allow a vote on restricting funds for abortion.

Democratic leaders today will let the lawmakers offer an amendment that would impose tougher limits on the use of federal money to finance abortions for people buying insurance on federally subsidized online exchanges. That amendment faces opposition from Democrats who support abortion rights.

The agreement came after a day of negotiations among House leaders including Speaker Nancy Pelosi to break an impasse to a vote on the biggest revamp of the nation’s medical-care system in more than four decades.

“This is the closest we’ve ever been” to an overhaul of the system, said Representative James McGovern, a Massachusetts Democrat, after the Rules Committee agreed to allow the abortion vote. “We have to make sure we don’t blow it.”

After House action, the spotlight would turn to the Senate, which is still struggling to find consensus on its own plan. If both the House and Senate pass legislation, lawmakers from each chamber would work together on a compromise for a new round of votes, a process that could take months.

The House went into session at about 9 a.m., and President Barack Obama later came to Capitol Hill to meet with Democrats and rally support for his top legislative priority. Obama’s motorcade was greeted by protesters with anti-abortion signs, with some chanting, “Kill the bill, kill the Pelosi bill.”

At the same time, House Democrats began preparing for a vote that would clear the way for debate on the legislation.

‘Brink of History’

“We stand here today on the brink of history,” said New York Representative Louise Slaughter, a Democrat who runs the House Rules Committee. She called the fight for universal health care “one of the greatest political struggles of our era.”

Obama and members of his Cabinet lobbied wavering Democrats as House leaders orchestrated the 11th-hour effort to secure votes needed to pass the legislation.

Representative Jason Altmire, an undecided Democrat from Pennsylvania, said yesterday that Obama and White House Chief of Staff Rahm Emanuel called him to make the pitch that “this is an historic moment.”

Not Final Product

Administration and House leaders have stressed the House bill isn’t the final product, since the Senate is deliberating over its own version, “but if we didn’t do this, it’s dead,” Altmire said.

The $1.05 trillion legislation would cover 36 million uninsured people and create a government program to compete with private insurers. It would require all Americans to get insurance, set up the new insurance-purchasing exchanges for people who don’t have employer-provided benefits, and provide subsidies to help people obtain coverage.

With Republicans unified in opposition, Democrats need 218 of their members to pass the bill. Two new Democrats won special elections on Nov. 3, giving the party a potential total of 258 in the 435-member House.

“Speaker Pelosi is trying to force her members to vote for a bill that the American people have soundly rejected,” House Republican Leader John Boehner of Ohio said at a press conference yesterday.

Abortion Obstacle

The abortion issue looms as a stumbling block to a vote, as does the question of how to prevent illegal immigrants from benefiting from government subsidies to buy insurance.

Anti-abortion Democrats, along with many Republicans, are concerned that lower-income Americans in the proposed health- insurance exchanges could use federal subsidies to pay for abortions.

The U.S. Conference of Catholic Bishops was among those raising concerns that the public plan might cover abortion. Representative Bart Stupak, a Michigan Democrat, proposed the amendment that the Rules Committee ultimately agreed to put up for a vote.

Stupak predicted his amendment would pass. “I think we’ll get more than 39, 40 Democrats,” he said.

Still, the amendment poses risks for Pelosi. Colorado Representative Diana Degette, a Democrat who leads a coalition of 190 Democrats who favor access to legal abortion, said her group would oppose any legislation that makes it harder for women to gain access to the procedure.

‘Critical Opportunity’

Some Democrats have voiced displeasure with other aspects of the legislation. Representative Stephanie Herseth Sandlin of South Dakota said she wouldn’t back the measure. “The House bill misses a critical opportunity to address access, quality and costs,” she said in a statement.

Herseth Sandlin, a leader of the Blue Dog Coalition of self-described fiscally conservative Democrats, held out the possibility the measure may be revised during negotiations with the Senate, which would follow passage in each chamber.

Another Blue Dog, John Tanner of Tennessee, issued a statement saying he wouldn’t support the bill because it “will not help control the long-term costs of health care.”

The bill calls for the biggest expansion of the nation’s health-care system since the 1965 creation of the Medicare program for the elderly.

Sunday Vote?

There was no guarantee a vote would be held today. Representative Artur Davis, an Alabama Democrat, said there’s a “growing sense” among lawmakers the vote will be delayed until tomorrow.

Pelosi, a California Democrat, said yesterday she was hopeful a Sunday session wouldn’t be necessary. “It all depends on the Republicans and how long they want to delay,” she said.

“We’ll see when we get to the floor,” Pelosi said when asked if she had the votes.

Another dispute involves illegal aliens. The legislation bars the undocumented immigrants from getting subsidies to purchase private insurance that would go to low-and middle- income people. Illegal immigrants would also be prevented from buying insurance from the government-run insurance plan.

Some lawmakers want to go beyond that, preventing the undocumented people from purchasing private coverage on the online exchange.

Raul Grijalva, an Arizona Democrat, said yesterday that Hispanic lawmakers got a pledge from leaders to defeat any Republican attempt to insert language to bar undocumented immigrants from exchanges.

House Rules Committee Chairwoman Louise Slaughter, a New York Democrat, said the immigration language won’t be changed by her panel.

To contact the reporters on this story: Ryan J. Donmoyer in Washington at rdonmoyer@bloomberg.net; Catherine Dodge in Washington at Cdodge1@bloomberg.net

Last Updated: November 7, 2009 12:14 EST