(Adds Trump quote, document with details on plan)
By Yasmeen Abutaleb and Richard Cowan
WASHINGTON, Oct 17 (Reuters) - Two U.S. senators on Tuesday reached a bipartisan agreement to shore up Obamacare for two years by reviving federal subsidies for health insurers that President Donald Trump planned to scrap, and the president indicated his support for the plan.
The deal worked out by Republican Senator Lamar Alexander and Democratic Senator Patty Murray would meet some Democratic objectives, including reviving the 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 Trump administration said last week it would stop paying billions of dollars to insurers to help lower-income Americans pay medical expenses, part of the Republican president's effort to dismantle Obamacare, former Democratic President Barack Obama's signature healthcare law.
The subsidies to private insurers cost the government an estimated $7 billion this year and were forecast at $10 billion for 2018. Trump's move to scuttle them had raised concerns about chaos in insurance markets.
Trump hoped to make good on his campaign promise to dismantle the law when he took office in January, with Republicans, who pledged for seven years to scrap it, controlling Congress. But he has been frustrated with their failure to pass legislation to repeal and replace it.
Obamacare, formally known as the Affordable Care Act, extended health insurance coverage to 20 million Americans. Republicans say it is ineffective and a massive government intrusion in a key sector of the economy.
The Alexander-Murray plan could keep Obamacare in place at least until the 2020 presidential campaign starts heating up.
"This takes care of the next two years. After that, we can have a full-fledged debate on where we go long-term on healthcare," Alexander said of the deal.
It is unclear whether the agreement can make it through Congress.
Chuck Schumer, the top Senate Democrat, said it had "broad support" among senators in his party, but it was harder to gauge possible support among Republicans.
Moderate Republican Senator Susan Collins, who helped sink earlier Obamacare repeal legislation, voiced backing for the new plan, but conservative Republicans may be less welcoming.
Senator Bernie Sanders, an independent who ran for the Democratic presidential nomination in 2016, threw his weight behind the effort. In an interview with Reuters, Sanders said Alexander was a “well-respected figure” known for bipartisanship and that the Tennessee senator’s reputation would help propel the legislation through the Senate.