(Adds analyst comment, updates shares)

By Caroline Humer and Ankur Banerjee

July 18 (Reuters) - UnitedHealth Group Inc, the largest U.S. health insurer, on Tuesday reported a better-than-expected quarterly profit, boosted by having put the Obamacare individual insurance business behind it.

UnitedHealth was losing money selling these plans when it pulled out of this market, as it and other insurers questioned the sustainability of former President Barack Obama's health reform law.

Republicans have vowed repeatedly to repeal and replace the law, but have disagreed on how to do that. A Senate effort collapsed late on Monday, prompting U.S. President Donald Trump to again call for a repeal of Obamacare with no replacement.

UnitedHealth CEO Stephen Hemsley said during a call with Wall Street analysts on Tuesday that he was optimistic about the business next year, but that national and state healthcare policy were a possible drag on profit in 2018.

"At this stage in the national conversation, speculation about any outcome here would be just that," Hemsley said.

The bill's failure removed one of the benefits of the bill for insurers - the planned repeal of an industry wide health insurance tax, Leerink Partners analyst Ana Gupte said.

UnitedHealth shares fell 0.7 percent to $184.97 in midday trading. Other insurers like Aetna Inc, Anthem Inc , Cigna Corp and Humana Inc were also down on the news.

"They had traded up a little on this expectation that the tax would go away next year," Gupte said. "I think investors are saying nothing is happening for a while."

Insurers typically raise prices on health plans to pass the 3-percent premium tax onto the insured but that part of Obamacare was put on hiatus last year after both Democrats and Republicans voted to do so. It would have been permanently repealed in the failed Republican bill.

UnitedHealth called on Tuesday for the permanent repeal of the health insurance tax, saying it hurts consumers.

EARNINGS RISE

UnitedHealth, which sells employer-based insurance as well as for the government programs Medicare for the elderly and Medicaid for the poor, said net earnings rose to $2.28 billion, or $2.32 per share, in the second quarter ended June 30, from $1.75 billion, or $1.81 per share, a year earlier.

Excluding items, UnitedHealth earned $2.46 per share, beating average estimate of $2.38, according to Thomson Reuters I/B/E/S.

Total revenue rose 7.7 percent to $50.05 billion, largely in line with estimates.

The insurer said its withdrawal from Obamacare individual markets, combined with the health insurance tax deferral, reduced second-quarter revenue by about $1.8 billion and lowered revenue growth rate by 4.5 percent.

(Additional reporting by Ankur Banerjee in Bengaluru; Editing by Shounak Dasgupta and Nick Zieminski)