UPDATE 2-Cost control helps health insurer Anthem top profit estimates

(Adds details, analyst comment)

July 26 (Reuters) - Anthem Inc's quarterly profit beat analysts' estimates as the health insurer reined in medical expenses at its Obamacare business.

The No.2 U.S. health insurer's results come a day after Senate Republicans narrowly agreed to open debate on a bill to end Obamacare, but efforts to roll back Democratic President Barack Obama's signature healthcare law still faces significant hurdles.

The healthcare industry has watched the debate nervously even as health insurers, including UnitedHealth Group and Aetna Inc, exit Obamacare markets amid mounting losses from the business.

Anthem, which had a large presence in the Obamacare insurance market, said last month it would mostly stop selling individual plans in Wisconsin and Indiana.

Anthem's benefit expense ratio, which measures its expenditure on insurance claims against the premiums it earns, rose to 86.1 percent in the second quarter ended June 30, from 84.2 percent, a year earlier. The lower the ratio, the better for insurers.

The ratio was, however, smaller than analysts' expectations, as Anthem controlled costs at its Obamacare and local group businesses.

The company appeared to be taking the right steps to improve performance in its Obamacare business, Cantor Fitzgerald analyst Steven Halper said. "We expect that, over time, Anthem will increase its Medicare footprint and grow its Medicaid business."

Anthem, which scrapped its $54 billion deal to buy Cigna Corp in May, said net income rose to $855.3 million, or $3.16 per share in the second quarter , from $780.6 million, or $2.91 per share, a year earlier.

Excluding items, the company earned $3.37 per share, beating analysts' average estimate of $3.23, according to Thomson Reuters I/B/E/S.

Total operating revenue climbed 4.3 percent to $22.20 billion. Analysts on average had expected revenue of $22.26 billion.

Anthem, which sells plans to employers as well as government-sponsored health insurance, said it now expects full-year adjusted profit to be greater than $11.70 per share, up from a previous forecast of at least $11.60. (Reporting by Ankur Banerjee in Bengaluru; Editing by Sai Sachin Ravikumar)