* Congress, staff, to keep federal health premium payments
* Ruling aimed at avoiding "brain drain" on Capitol Hill (Adds comments from Republicans, Pelosi, edits)
By David Lawder
WASHINGTON, Aug 7 (Reuters) - Congress has won some partial relief for lawmakers and their staffs from the "Obamacare" health reforms that it passed and subjected itself to three years ago.
In a ruling issued on Wednesday, U.S. lawmakers and their staffs will continue to receive a federal contribution toward the health insurance that they must purchase through soon-to-open exchanges created by President Barack Obama's signature healthcare law.
The decision by the Office of Personnel Management, with Obama's blessing, will prevent the largely unintended loss of healthcare benefits for 535 members of the Senate and House of Representatives and thousands of Capitol Hill staff.
When Congress passed the health reform law known as Obamacare in 2010, an amendment required that lawmakers and their staff members purchase health insurance through the online exchanges that the law created. They would lose generous coverage under the Federal Employees Health Benefits Program.
The amendment's author, Republican Senator Charles Grassley, argued that if Obamacare plans were good enough for the American public, they were good enough for Congress. Democrats, eager to pass the reforms, went along with it.
But it soon became apparent the provision contained no language that allowed federal contributions toward their health plans that cover about 75 percent of the premium costs.
This caused fears that staff would suddenly face sharply higher healthcare costs and leave federal service, causing a "brain drain" on Capitol Hill.
But Wednesday's proposed rule from the OPM, the federal government's human resources agency, means that Congress will escape the most onerous impact of law as it was written.
The OPM said the federal contributions will be allowed to continue for exchange-purchased plans for lawmakers and their staffs, ensuring that those working on Capitol Hill will effectively get the same health contributions as millions of other federal workers who keep their current plan.
The problem surrounding the Obamacare language for Capitol Hill staff was the subject of intense negotiations in recent weeks between House and Senate leaders and the Obama administration.
Some Republicans immediately slammed the OPM decision, using it as fuel for their campaign to turn public opinion against Obamacare just as its core provisions are due to go into effect.
"While the administration has handed out waiver after waiver and exemption after exemption for the well-connected in Washington, they have done nothing to lower health care costs for families in Michigan," said Dave Camp, chairman of the tax-writing House Ways and Means Committee.
Camp said the OPM ruling is the "latest proof" of impending failure for the reforms and pledged that Republicans would keep trying to repeal them.
Last week, House Democratic leader Nancy Pelosi said the language problem would have caused unintended "collateral damage" on congressional staff, causing many to leave for the private sector.
"They are a tremendous intellectual resource, people who could, shall we say, be better compensated financially outside" of government, said Pelosi, who spearheaded passage of the health care law in 2010 as House Speaker.
Lawmakers and staff still must purchase plans on the exchanges for coverage that starts in January, OPM said, and they will not be eligible for tax credits to offset premium payments. These credits are the main federal subsidy mechanism for all other health plans purchased through Obamacare exchanges due to open in October. These tax subsidies fall off quickly as income rises.
Tim Jost, a healthcare law expert at Washington and Lee University in Lexington, Virginia, said it was probably never Congress' intention to take away federal benefit contributions from Capitol Hill employees, just to push them into them into the exchanges.
"This clarifies what they really intended to do all along," Jost said. "Congress had subjected itself to a requirement that applied to nobody else in the country."
Republican Senator David Vitter vowed to reverse the OPM ruling to ensure that no members of Congress, Capitol Hill staff nor Obama administration appointees get any federal subsidies for health insurance purchased on Obamacare health exchanges.
"These recent maneuverings inside the beltway are precisely why the American people rightly despise Congress," said Vitter, of Louisiana. "Perhaps if White House appointees and Congress have to live under these same Obamacare rules, things would be changed quickly for the better." (Reporting By David Lawder; Editing by Bill Trott and Cynthia Osterman)