SNAP ANALYSIS: Healthcare vote is good news for Obama

WASHINGTON (Reuters) - The U.S. Senate Finance Committee on Tuesday backed a bill to reform the U.S. healthcare system, the top priority on President Barack Obama's domestic agenda.

The vote was a boost for Obama and his Democrats, but there is still a long way to go before the U.S. Congress approves a health sector overhaul.

* BOOST FOR OBAMA

The vote is a boost for Obama, who has made reforming healthcare his top domestic objective. Although opinion polls show Americans are divided on health reform, Tuesday's decision moved the president's agenda forward on at least one issue.

Obama has been criticized for trying to do too much, from running wars in Iraq and Afghanistan, pledging to rid the world of nuclear weapons, trying to promote Middle East peace, fixing the U.S. economy and cutting carbon emissions.

* REPUBLICAN BACKING

The fact that a Republican senator, Olympia Snowe, broke ranks with her party and backed the finance panel's bill allows Obama to try to promote healthcare reform as a bipartisan effort.

"It's certainly a positive for the likelihood of some type of reform that she supported this bill because it at least shows there's some version of reform that at least one Republican is willing to support," said Steve Shubitz, an analyst with brokerage Edward Jones.

Snowe is the only Republican to cross over and she said her support was not guaranteed as the legislation moves through Congress.

* LONG WAY TO GO

Healthcare reform is still a long way from becoming reality. "There are many, many miles to go in this legislative journey," Snowe said. The finance panel bill will now be merged with one approved by the Senate Health Committee. It might take several weeks before that happens and a bill is debated on the Senate floor and voted on. Meanwhile, leaders in the House of Representative have to produce their own version of healthcare reform, which will be combined with the Senate measure. Most observers reckon a healthcare bill might be ready by the end of the year.

* PUBLIC OPTION

The Finance Committee rejected including a new government-run insurance plan, often called the "public option," in its bill. But the public option is backed by Obama and House leader Nancy Pelosi and it might make a comeback as the health overhaul moves through Congress. Promoters of the public option say it would create competition in the insurance market and reduce costs but Republican critics believe it creates a precedent for a government takeover of the health industry. Some Democrats oppose the public option.

* COMPANIES AFFECTED

Health insurers' stocks dropped by 1.9 percent on Tuesday, hit by news that the bill was passing the Finance Committee. But there some winners in the health industry included the pharmaceutical sector, which managed to keep intact an $80 billion rebate in the bill. Hospitals also maintained a $155 billion, 10-year deal with Baucus and the White House to accept lower government payments. (Reporting by Alistair Bell and Lewis Krauskopf; Editing by Doina Chiacu) (For full coverage of U.S. healthcare reform, click on [nN20512341])