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UPDATE 3-Trump backs away from Senate deal on stabilizing Obamacare

(Alexander says Trump engineered the proposal, Adds Ryan's spokesman, )

WASHINGTON, Oct 18 (Reuters) - President Donald Trump on Wednesday backed away from a bipartisan deal from two U.S. senators to stabilize Obamacare by restoring subsidies to health insurers, one day after signaling his support for the plan.

Republican Senator Lamar Alexander, who reached the agreement with Democratic Senator Patty Murray, said Trump had "completely engineered" the proposal.

The agreement would provide billions of dollars of subsidies to insurers for two years to help lower-income Americans obtain medical coverage. Trump last week announced he would end the subsidies, potentially creating chaos in the 2018 health insurance markets set up under Obamacare.

"I am supportive of Lamar as a person & also of the process, but I can never support bailing out ins co's who have made a fortune w/ O'Care," Trump wrote on Twitter on Wednesday.

In another setback, Republican House of Representatives Speaker Paul Ryan indicated no interest in the Alexander-Murray agreement.

"The speaker does not see anything that changes his view that the Senate should keep its focus on repeal and replace of Obamacare," Ryan spokesman Doug Andres said.

While the proposal drew broad Democratic support, it remained unclear whether the agreement will even come to a vote in the Senate and House, both controlled by Trump's fellow Republicans. Republicans have a 52-48 Senate majority but other than Alexander, Susan Collins and John McCain are the only Republican senators who have publicly embraced the plan.

On Tuesday, Trump had indicated support of the agreement during a news conference, saying the White House had been involved in the negotiations and that the agreement would be a "short-term solution" that would "get us over this intermediate hump."

During Tuesday's news conference, he also made clear that he wanted broader legislation to repeal and replace Obamacare and that he still considered the subsidies a government handout that had enriched insurance companies.

He also told a conservative think thank, "While I commend the bipartisan work done by Senators Alexander and Murray ... I continue to believe Congress must find a solution to the Obamacare mess instead of providing bailouts to insurance companies."

The Trump administration followed through on the president's plan to end the subsidies and did not make a payment of hundreds of millions of dollars to insurers that had been scheduled for Wednesday.

MORE FLEXIBILITY

The Alexander-Murray proposal would meet some Democratic objectives, such as reviving subsidies for Obamacare and restoring $106 million in funding for a federal program that helps people enroll in insurance plans.

In exchange, Republicans would get more flexibility for states to offer a wider variety of health insurance plans while maintaining the requirement that sick and healthy people be charged the same rates for coverage.

The subsidies compensate private insurers for reducing deductibles, co-payments and other out-of-pocket expenses for low-income customers. They are known as cost-sharing reduction payments.

At an event sponsored by the news website Axios shortly before Trump posted his tweet on Wednesday, Alexander said, "Trump completely engineered the plan that we announced yesterday."

"He wanted a bipartisan bill for the short term," Alexander added.

Collins, a moderate who helped kill earlier Senate efforts to repeal and replace the healthcare law, said she did not know if Senate Majority Leader Mitch McConnell would schedule a vote but told CNN, "If it comes to the floor, I think the votes are there."

The president's move last week to discontinue subsidies was part of his effort to dismantle the 2010 Affordable Care Act, known as Obamacare, through executive actions because his fellow Republicans who control Congress have failed to pass legislation to repeal and replace the law.

Trump said on Tuesday he wanted lawmakers, once they have completed work on his tax-cut proposal, to again take up broader legislation that failed in the Senate last month that would divvy up federal healthcare money as block grants to states.

Republicans, describing Obamacare as ineffective and a massive government intrusion in a key sector of the economy, have sought for seven years to repeal and replace it. Scrapping the law was also a top Trump campaign pledge.

Democrats have fought to defend Obamacare, which extended health insurance to 20 million Americans.

Republicans in Congress could face political risks if they fail to act on healthcare. Opinion polls this year have shown public support for Obamacare rising even as Trump and his allies in Congress have sought to dismantle it. (Reporting by Yasmeen Abutaleb and Susan Heavey; Additional reporting by Roberta Rampton; Writing by Will Dunham; Editing by Bill Trott)