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Beside a painting of Hillary Clinton, U.S. President Donald Trump makes a surprise appearance in front of a tour group at the White House in Washington, U.S. March 7, 2017. REUTERS/Kevin Lamarque

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By Yasmeen Abutaleb and Susan Cornwell

WASHINGTON (Reuters) - President Donald Trump on Tuesday endorsed a plan by Republican U.S. lawmakers to replace the Obamacare healthcare law but influential conservative groups came out strongly against it, complicating the proposal's prospects for passage in Congress.

Republicans in the U.S. House of Representatives on Monday unveiled legislation to do away with Obamacare, eliminating the requirement that most Americans obtain medical insurance and creating a system of tax credits to coax people to purchase private insurance on the open market.

Trump said the draft bill was open to negotiation, adding he was working on a system to cut drug prices.

The lawmakers' plan is a key step toward carrying out pledges by Trump and congressional Republicans to dismantle Obamacare, Democratic former President Barack Obama's signature domestic policy achievement.

But lawmakers face pressure from constituents not to throw America's healthcare system into chaos, and some conservatives complained the bill did not go far enough in removing government from the healthcare industry. One Republican senator dubbed it "Obamacare Lite."

With Democrats already lined up in opposition to the proposal, conservative groups including Heritage Action for America and the Club for Growth also came out forcefully against it.

Americans for Prosperity and Freedom Partners, backed by the billionaire Republican donor Koch brothers, urged its defeat.

"The bill currently under consideration in the House does not repeal the elements that made Obamacare so devastating to American families and we cannot support it," the groups said in a letter to Republican House Speaker Paul Ryan.

They said the bill maintains some Obamacare regulations and mandates that have caused rising insurance prices, and that "it creates a new entitlement in the form of tax credit subsidies."

Obamacare, formally known as the Affordable Care Act, is popular in many states, even some controlled by Republicans. It has brought health insurance coverage to about 20 million previously uninsured Americans since it became law in 2010, although premium increases have angered some.

Democrats and some moderate Republicans said the new House measure would hit lower-income Americans by rolling back the Obamacare expansion of the Medicaid health insurance program for the poor.

In a series of Twitter posts, Trump called the draft "our wonderful new Healthcare Bill" and said it was "now out for review and negotiation."

Trump, who has previously called for lower drug prices, added, "I am working on a new system where there will be competition in the Drug Industry. Pricing for the American people will come way down!" He gave no details. His comment sent shares of drugmakers lower.

House Democratic leader Nancy Pelosi said the proposal would force millions of people off health insurance rolls and benefit the wealthy.

During a White House briefing, Health and Human Services Secretary Tom Price sidestepped a question about whether he could guarantee the plan would not result in millions of Americans losing health insurance. Price called the measure "a work in progress."

Price said the drug-pricing initiative would occur in a second or third phase of healthcare action beyond the unveiling of the House plan, involving regulatory changes and other legislative fixes.

Trump said on Twitter there would be additional action to allow people to buy health insurance across state lines "in phase 2 & 3 of healthcare rollout."

UNCERTAIN FUTURE

Republicans control both Congress and the White House but the future remains uncertain for the plan. It must win approval in the House and the Senate before it could go to Trump for his signature. In the Senate, Republicans hold a narrower majority and some conservatives have expressed doubts.

Senator Roy Blunt, a member of the Senate Republican leadership, appeared to question whether there were enough votes in Congress for passage.

"I'm going to be very anxious to hear how we get to 51 votes and how the House gets to 218," Blunt told reporters, referring to the minimum number of votes needed for passage in the two chambers.

The bill met with skepticism from some moderate Republicans concerned about its tax credits and Medicaid provisions.

Shares in hospitals, whose government reimbursements would be impacted by changes in federal reimbursement for Medicaid, fell, with Tenet Healthcare Corp <THC.N> off 6 percent and Community Health Systems <CYH.N> down 7 percent.

Investors, insurers and hospitals expressed concern that the planned tax credits and the draft legislation did not do enough to make health insurance affordable.

Under the bill, Obamacare's income-based and location-based tax credits would be replaced by fixed tax credits, which could put plans out of reach for consumers in certain states and result in lower enrollment, some industry sources said. The BlueCross BlueShield Association (BCBSA), which represents Anthem Inc <ANTM.N>, the biggest player in the individual Obamacare markets this year, emphasized the need for affordable insurance. "It is important that the tax credit for 2020 creates a marketplace that enables people to get the coverage they need at a price they can afford," BCBSA Senior Vice President Alissa Fox said. To keep prices down, Republicans will need the buy-in from Anthem and other insurers, particularly after UnitedHealth Group Inc <UNH.N>, Aetna Inc <AET.N> and Humana Inc <HUM.N> exited most of the states where they sold individual insurance plans under Obamacare.

'OBAMACARE LITE'

White House Office of Budget and Management Director Mick Mulvaney said the plan should pass the House before lawmakers break in mid-April.

Republican Senator Rand Paul of Kentucky, who has proposed his own alternative healthcare plan, criticized the House plan as a windfall for private insurers, dubbing it "Obamacare Lite."

Four moderate Senate Republicans raised concerns over Medicaid. Nearly half of the previously uninsured Americans who gained coverage under Obamacare got it through the expansion of Medicaid, which would end in 2020 under the Republicans' new plan, then face funding caps.

Instead of current income-based subsidies to buy a plan, Republicans proposed tax credits, which would range from $2,000 to $4,000. Their plan also seeks to encourage people to buy insurance with the age-based credits that are capped at upper-income levels.

The plan also would remove the penalty paid by Americans without insurance coverage and roll back government subsidies that helped lower-income people purchase insurance through government-run exchanges.

Mulvaney said he expected the nonpartisan Congressional Budget Office's budgetary review of the bill in a few days. Congress’s nonpartisan tax analysis unit, the Joint Committee on Taxation, estimated repealing Obamacare’s taxes alone will cost almost $700 billion through 2027.

(Additional reporting by Doina Chiacu and Caroline Humer; Writing by Alistair Bell; Editing by Frances Kerry and Will Dunham)

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