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UPDATE 4-U.S. Senate Republicans revise health bill, add penalty on coverage lapse

lapse@ (Adds comment by Rand Paul, Blue Cross and Blue Shield)

WASHINGTON, June 26 (Reuters) - U.S. Senate Republicans released changes on Monday to their healthcare bill to replace Obamacare, adding a measure that would penalize people who let their insurance coverage lapse for an extended period, following criticism that the original bill would result in a sicker - and more expensive - insurance pool.

President Donald Trump and his fellow Republicans in Congress have been pushing to repeal and replace Obamacare, Democratic former President Barack Obama's signature domestic legislation.

The Senate bill unveiled last week was immediately criticized by both conservatives and moderates in the party, casting doubt over whether Republicans could win passage. They have only a 52-seat majority in the 100-seat Senate.

It was not immediately clear if the revisions to the bill would sway any Republicans who had opposed the original measure.

Senate leaders want to hold a vote on the bill before the July 4 recess that starts at the end of this week.

But in another blow to the bill, the American Medical Association (AMA), the country's largest association of physicians, announced Monday that it opposed the legislation.

The nonpartisan Congressional Budget Office is to release its assessment of the bill's cost and impact on future budget deficits later on Monday.

The original Senate bill had dropped the Obamacare penalty on those who do not have insurance. Experts had warned that canceling the fine could lead to a sicker pool of people with insurance, because young and healthy people would not face consequences for failing to purchase insurance.

The revised bill would impose a six-month waiting period for anyone who lets their health insurance lapse for over 63 days and then wants to re-enroll in a plan in the individual market.

The version of a healthcare bill passed by the Republican-majority House of Representatives last month includes a provision also aimed at those who let their insurance lapse for more than 63 days, allowing insurers to charge a 30 percent penalty over their premium for one year.

Democrats have assailed the Republican healthcare proposals, and Senate Democratic Leader Chuck Schumer strongly criticized the Republicans' new provision for a waiting period, saying in a statement that tens of millions of Americans experience a gap in their healthcare coverage every year because of job losses or temporary financial problems.

The provision "would pour salt in that wound, locking American families out of health insurance for even longer, thanks to this six-month ban provision," Schumer said.

The AMA, in a letter to Senate leaders on Monday, said the Senate bill violated the doctors' precept of "first, do no harm."

The AMA said it was especially concerned with a proposal to put the Medicaid healthcare program for the poor on a budget, saying this could "fail to take into account unanticipated costs of new medical innovations or the fiscal impact of public health epidemics, such as the crisis of opioid abuse currently ravaging our nation."

At least four conservative Republicans - Senators Ted Cruz, Rand Paul, Ron Johnson and Mike Lee - have expressed opposition to the original draft legislation, saying it does not go far enough in repealing Obamacare.

Moderate Republican Senator Dean Heller said on Saturday that he could not support the Senate bill as written, and some other moderates have either withheld judgment or expressed doubts about replacing Obamacare with legislation that is similar to the House version.

They are concerned that the party's approach to healthcare would cause too many people, especially those with low incomes, to lose health coverage. Trump touted passage of the House bill as a victory but later called it "mean."

Republicans have targeted Obamacare since it was passed in 2010, viewing it as costly government intrusion and saying that individual insurance markets are collapsing. The legislation expanded health coverage to some 20 million Americans, through provisions such as mandating that individuals obtain health insurance and expanding Medicaid.

TRUMP'S INVOLVEMENT

As he did during the House negotiations, Trump has personally pushed for a Senate bill, calling fellow Republicans to mobilize support.

White House spokesman Sean Spicer said on Monday that Trump had "talked extensively to several Republican members over the weekend and he felt very positive about those discussions, but they're ongoing."

He said the president had talked to Cruz, Paul and Johnson, as well as Senator Shelley Moore Capito, "and I think several others."

A spokesman for Paul said the senator and Trump had a "productive call" and that Paul "reiterated his issues with the current bill- how it isn't serious repeal, and what things he will need to be convinced it can lower costs for Americans." Paul was open to working with the president and Senate colleagues on improving the bill, the spokesman said.

Health insurance companies have expressed concern about the bill's plan to cut Medicaid and the impact on state governments as well as the prospect of losing Obamacare's mandate on individuals to buy insurance without creating alternative incentives for people to stay in their plans.

Insurer Blue Cross and Blue Shield said in a statement after the changes to the bill were released that it was encouraged by the steps to make the individual insurance market more stable, including strong incentives for people to stay covered continuously.

If the Senate passes a bill, it will either have to be approved by the House, the two chambers would have to reconcile their differences in a conference committee, or the House could pass a new version and bounce it back to the Senate.

(Writing by Richard Cowan and Frances Kerry; Additional reporting by Eric Walsh and Susan Cornwell; Editing by Leslie Adler)