WRAPUP 6-US healthcare bill to cut deficit, CBO says

* House Democrats finish work on final health bill

* Bill costs $940 billion over 10 years, cuts deficit

* Close vote expected Sunday, but leaders confident (Adds two more House Democrats switch to "yes")

By John Whitesides and Donna Smith

WASHINGTON, March 18 (Reuters) - Congressional budget analysts said on Thursday a broad healthcare overhaul would cut the U.S. deficit over 10 years and sharply expand insurance coverage, boosting the momentum for final passage in the House of Representatives.

President Barack Obama postponed a scheduled visit to Indonesia and Australia to help round up support on what is expected to be a close vote on Sunday on his top legislative priority.

House Democratic leaders unveiled the final changes to the overhaul, which the nonpartisan Congressional Budget Office estimated would expand coverage at a cost of $940 billion over 10 years and cut the deficit by $138 billion in the same period through new fees, taxes and cost-saving measures. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Take a Look on healthcare [ID:nHEALTH] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Obama said the healthcare bill, which has faced solid Republican opposition, represented "the most significant effort to reduce deficits since the Balanced Budget Act" of 1993.

"This is history, and this is progress," House Speaker Nancy Pelosi said of the overhaul. The bill would represent the biggest changes to the $2.5 trillion healthcare system in the past four decades.

After weeks of wrangling over the package to ensure the numbers came out favorably, House leaders presented the final revisions to Democrats at a morning caucus and posted them on the Rules Committee website later on Thursday.

"It took some time, but we are very pleased," Pelosi said after the meeting.

The overhaul would extend coverage to 32 million uninsured Americans, the CBO estimated, and ban insurance practices like refusing coverage to those with pre-existing medical conditions.

It requires all Americans to have health insurance, but gives subsidies to help low- and middle-income workers pay for it. The bill also expands Medicaid, the federal health program for the poor.

The final package of changes also included Obama's proposed revamp of the federal student loan program, which would boost aid for needy students.

The AFL-CIO, the largest labor union federation, endorsed the final version, which includes a weakened version of a tax on high-cost "Cadillac" insurance plans the union had feared would hit union members.

"It is not a perfect bill. But we are realistic enough to know it's time for the deliberations to stop and for progress to begin," AFL-CIO President Richard Trumka said.

'UNSALVAGEABLE'

Democrats hoped the favorable CBO preliminary estimate would help them round up the 216 votes they need to pass the overhaul, the focus of an intense political brawl in Congress for months.

Two more House Democrats who voted against the overhaul in November, Bart Gordon and Betsy Markey, said they would vote for the final bill, bringing the total of those who have switched to "yes" to three. Dennis Kucinich announced his switch to "yes" on Wednesday.

Republicans said the new CBO preliminary estimates showed the revised bill was more of the same.

"Republicans have been saying for nearly a year now that this bill is unsalvageable. This latest CBO score proves our point," said Senate Republican leader Mitch McConnell, pointing to the bill's new taxes and cuts in Medicare, the federal health program for the elderly.

If the Senate-passed bill is approved by the House on Sunday, it would become law once it is signed by Obama. The final changes unveiled on Thursday, designed to win over wavering Democrats, would move in a separate bill that the Senate would take up next week.

Healthcare stocks, as measured by the Morgan Stanley Healthcare Payor Index .HMO, rose 3 percent on Thursday and outpaced the broader market as investors still believed the bill would not pass.

"These stocks really are a speculators' paradise given the significant uncertainty as to what's going to happen with healthcare reform," said Steve Shubitz, an analyst with Edward Jones who follows big insurance companies.

The lobbying group representing the insurance industry said the revised bill would not do enough to bring down healthcare costs and ensure that individuals purchase insurance.

"Unfortunately, this legislation will drive up healthcare costs by adding billions in new healthcare taxes and encouraging people to wait until they are sick before getting insurance," said Karen Ignani, president of America's Health Insurance Plans.

The final legislative revisions are meant to ease concerns of Obama and House Democrats about the Senate's version of the bill, which cost $875 billion over 10 years and had budget savings of $118 billion in the same period.

The changes would eliminate a controversial Senate deal exempting Nebraska from paying for Medicaid expansion costs, close a "doughnut hole" gap in prescription drug coverage and raise the threshold and delay the implementation of the tax on high-cost insurance plans.

To replace some of the lost revenue from that tax, the bill would extend taxes for Medicare, the federal health insurance program for the elderly and disabled, to unearned income.

The CBO report said the final bill would extend Medicare's solvency for nine years and reduce annual growth in Medicare expenditures.

The final bill also would delay fees on medical device manufacturers but make them slightly higher than the House bill. It also delays the fee on drugmakers for brand-name drugs and the insurance industry. (Additional reporting by Susan Heavey, Tabassum Zakaria, Bill Berkrot, Lewis Krauskopf and Ryan Vlastelica; Editing by David Alexander and Paul Simao)