Senate backs healthcare fix, sends to House

President Barack Obama signs the healthcare legislation during a ceremony in the East Room of the White House in Washington, March 23, 2010.

WASHINGTON (Reuters) - The Senate on Thursday approved a package of changes to President Barack Obama's landmark healthcare reforms, and Obama dared Republicans to try to repeal the new law.

The House of Representatives is expected to give final approval to the changes later in the day and send them to Obama for his signature, concluding a yearlong struggle that has tied up lawmakers, dented Obama's popularity and set the stage for a bitter campaign for control of Congress in November.

The changes put the finishing touches on the sweeping healthcare reform bill signed into law this week by Obama, who visited Iowa on Thursday to launch a public relations blitz to sell the new program.

"This has been a legislative fight that will be in the record books," Democratic Senate leader Harry Reid said before the final vote.

Obama warned Republicans, who uniformly opposed the overhaul and have vowed to make repealing the law a central issue in November's elections, that efforts to reverse the healthcare reforms would backfire.

"If they want to have that fight, I welcome that fight," Obama said in his first big speech since enacting the most sweeping new U.S. social policy in decades.

"I don't believe the American people are going to put the insurance industry back in the driver's seat. We've been there already and we're not going back," he said.

The healthcare changes approved by the Senate on a 56-43 vote include an expansion of subsidies to make insurance more affordable and more state aid for the Medicaid program for the poor.

They also eliminate a controversial Senate deal exempting Nebraska from paying for Medicaid expansion costs, close a gap in prescription drug coverage for seniors and delay a tax on high-cost insurance plans.

The final package also would extend taxes for Medicare, the federal health insurance program for the elderly, to unearned income. It also includes reform of the student loan program.

The overhaul of the $2.5 trillion healthcare system is the most dramatic revamp of health policy in four decades. It will extend coverage to an estimated 32 million uninsured Americans and bar insurance practices like refusing coverage to those with pre-existing medical conditions.

Republicans have fought the measure as a costly government takeover of healthcare.

"This has been a somber week for the American people. With the stroke of a pen, President Obama signed away another share of Americans' freedom," Republican House leader John Boehner said.

But Obama said he would be happy to engage Republicans in a debate over repeal of the law.

'GO FOR IT'

"I say go for it," Obama said, goading his critics. "If these congressmen in Washington want to come here to Iowa and tell small business owners that they plan to take away their tax credits and essentially raise their taxes, be my guest."

The House approved the overhaul and the companion package of changes on Sunday after a contentious debate, but must vote again on the changes after the Senate parliamentarian ordered two minor provisions on the student loan revamp be removed.

The parliamentarian ruled the provisions do not meet reconciliation rules requiring they have a budgetary impact.

The Senate's vote came after Democrats killed about 40 Republican amendments designed to derail the bill or force Democrats into tough political votes ahead of the elections.

As the end of the healthcare debate neared, the Morgan Stanley Healthcare Payor index of health insurers rose 0.8 percent in morning trading, roughly in line with the broader market. Big insurers UnitedHealth Group rose 1.2 percent, while Aetna increased 2.1 percent.

A second major U.S. manufacturer said the overhaul would cause a huge rise in after-tax costs. Farm equipment maker Deere & Co. said it expected healthcare costs to rise by $150 million this year.

Equipment maker Caterpillar last week estimated the reform would raise its costs by more than $100 million.

White House spokesman Robert Gibbs brushed off those concerns and said the first-year increase occurred because the healthcare law closed an accounting loophole.

"Our bill simply closes the loophole that allows them to deduct that money one time by not counting it as income," he told reporters on Air Force One.

(Additional reporting by Andy Sullivan, Patricia Zengerle, Thomas Ferraro; Editing by David Alexander and Vicki Allen)