By Yasmeen Abutaleb, Amanda Becker and David Morgan
WASHINGTON (Reuters) - A U.S. Senate led by Donald Trump's fellow Republicans failed by a single vote to pass a healthcare bill on Friday, delivering a stinging blow to the president as it undermined his campaign promise to dismantle Obamacare.
Three Republican senators - John McCain, Susan Collins and Lisa Murkowski - joined Senate Democrats in the dramatic early-morning 51-49 vote rejecting the bill. The outcome may spell doom for the party's seven-year quest to gut a 2010 law that was Democratic former President Barack Obama's signature domestic policy achievement.
For the moment the Affordable Care Act, which extended health insurance to 20 million people and drove the percentage of uninsured people to historic lows, remains in place and must be run by an administration that is hostile to it.
This leaves health insurers unsure how long the administration will continue to make billions of dollars in Obamacare payments that help cover out-of-pocket medical expenses for low-income Americans.
In Friday's vote, Senate Majority Leader Mitch McConnell was unsuccessful in securing passage of even a stripped-down so-called skinny bill that would have repealed a few key parts of Obamacare. Broader legislation was defeated earlier in the week.
"It's time to move on," McConnell, whose reputation as a master strategist was in tatters, said on the Senate floor after the vote that unfolded at roughly 1:30 a.m.
"The American people are going to regret that we couldn't find a better way forward," McConnell added.
Republicans have long denounced Obamacare - which expanded the Medicaid health insurance for the poor and disabled and created online marketplaces for individuals to obtain coverage - as an intrusion by government on people's healthcare decisions.
The Senate failure to move forward on dismantling it called into question the Republican Party's basic ability to govern even as it controls the White House, Senate and House of Representatives.
Trump has not had a major legislative victory after more than six months in office. He had promised to get major healthcare legislation, tax cuts and a boost in infrastructure spending through Congress in short order.
"3 Republicans and 48 Democrats let the American people down. As I said from the beginning, let Obamacare implode, then deal. Watch!" Trump wrote on Twitter after the vote.
But McCain wrote on Twitter, "Skinny repeal fell short because it fell short of our promise to repeal & replace Obamacare w/ meaningful reform."
Republicans released the skinny bill just three hours before voting began. It would have retroactively repealed Obamacare's penalty on individuals who do not obtain health insurance, repealed for eight years a penalty on certain businesses that do not provide employees with insurance and repealed a tax on medical devices until 2020. The nonpartisan Congressional Budget Office estimated that if it became law, 15 million fewer Americans would be insured in 2018 than under existing law.
The Affordable Care Act was passed by a then-Democratic controlled Congress with no Republican support in 2010. But Republicans have failed to come up with a consensus plan to replace it at a time when they hold all the power in Washington.
UNCERTAINTY FOR HEALTHCARE INDUSTRY
Health insurers have until September to finalise their 2018 health plans in many Obamacare marketplaces.
Some insurers, including Humana (N:HUM) and Aetna (N:AET), have pulled out of such markets, citing the uncertainty over the payments. Others have raised rates by double digits and said that they will need to raise rates another 20 percent if the uncertainty does not ease. Anthem Inc (N:ANTM), which has already left three of the 14 states where it sells Blue Cross Blue Shield plans, said this week it might pull out of more.
Wall Street traded lower on Friday with less focus on the news from the Senate overnight and more on key earnings from Amazon (O:AMZN) and Exxon (N:XOM). Shares of hospitals were mixed: Tenet Healthcare (N:THC) fell 2 percent, Community Health Systems (N:CYH) was nearly flat and HCA Healthcare (N:HCA) gained 1.2 percent. Shares of health insurers were also mixed. Aetna was off 0.2 percent, Anthem gained 0.4 percent and Humana (N:HUM) was off 0.3 percent.
Democrats, and some Republicans, said the bill's failure could present an opportunity for the two parties to work together to fix problematic areas of the Obamacare law without repealing it.
Top House Democrat Nancy Pelosi called on Republican House Speaker Paul Ryan to establish a process for moving forward on improving Obamacare, rather than repealing it.
After the House passed a bill to repeal and replace Obamacare in May, McConnell grappled to get Senate Republicans to agree on their version of the bill. Hard-line conservatives wanted a bill that would substantially gut Obamacare, while moderates were concerned over legislation that could deprive millions of people of their healthcare coverage.
Republicans hold a 52-48 majority in the 100-seat Senate and could afford to lose support from only two Republican senators, with Vice President Mike Pence ready to cast a tie-breaking vote on the Senate floor.
DRAMA OVER MCCAIN
As the vote on the skinny bill approached, all eyes in the Senate chamber were on McCain. The 2008 Republican presidential nominee flew back from Arizona earlier in the week after being diagnosed this month with brain cancer. McCain, an 80-year-old former prisoner of war in Vietnam who tangled with Trump during the 2016 election campaign and was disparaged by him, won praise for this from the president.
McCain, a veteran senator who has long been known for his independent streak, delivered a rousing speech on Tuesday calling for cooperation between the parties and then cast a decisive vote in allowing the Senate to take up the healthcare bill.
Early on Friday, he sat on the Senate floor talking to Collins, Murkowski, and Republican Senator Jeff Flake, also from Arizona. Collins and Murkowski both voted this week against broader Republican healthcare proposals, and both had concerns about the pared-down proposal.
McCain was approached before voting began by Pence and a close friend, Republican Senator Lindsey Graham. After speaking to them, McCain walked across the Senate floor to tell top Senate Democrat Chuck Schumer and other Democrats he would vote with them.
When McCain walked to the front of the Senate chamber to cast his deciding "no" vote, giving a thumbs down, Democrats cheered, knowing the bill would fail.
Trump had often expressed exasperation over the failure of congressional Republicans to overcome internal divisions to repeal Obamacare, but offered no policy specifics himself.
He has demanded at various times that Obamacare should be allowed to collapse on its own, that it should be repealed without replacement, and that it should be repealed and replaced.