(Reuters) - Republicans vowed to fight back on Monday after Congress passed President Barack Obama's landmark healthcare overhaul, while a dozen U.S. states promised new legal challenges and health stocks rose.

The narrow vote for final passage in the House of Representatives late on Sunday capped a year-long political struggle that consumed Congress and dented Obama's approval ratings, but the biggest health policy changes in four decades still face a variety of hurdles.

Republican attorneys general in at least 12 states said they would file lawsuits challenging the constitutionality of the overhaul and contending it infringed on state sovereignty.

Health stocks rose as investors were relieved to finally have certainty about the healthcare battle and pleased at the prospect of more business from 32 million newly insured Americans.

The Morgan Stanley Healthcare Payor index of health insurers was up 1.2 percent, outpacing the broader market, although large insurers WellPoint Inc and UnitedHealth Group dropped after rising in morning trading.

The bill expands the government health plan for the poor, imposes new taxes on the wealthy and bars insurance practices such as refusing to cover people with pre-existing medical conditions.

The White House said Obama will sign the bill on Tuesday and travel to Iowa on Thursday to promote the overhaul.

LONG-SOUGHT GOAL

The approval fulfills a goal that had eluded many U.S. presidents for a century -- most recently Democrat Bill Clinton in 1994. House Speaker Nancy Pelosi signed the legislation on Monday before sending the bill to the White House.

Republican critics said the $940 billion legislation was a heavy-handed intrusion in the healthcare sector that will drive up costs, increase the budget deficit and reduce patients' choices.

Republicans said they would fight a package of changes designed to improve the bill, which will be taken up in the Senate this week, and lead a charge to repeal the bill after reclaiming Congress from Democrats in November's elections.

"We will challenge this all over America, and the will of the people will be heard," Republican Senator John McCain, who faces a conservative primary challenger in his home state of Arizona, said on the Senate floor.

Republicans said they would challenge the changes to the overhaul on parliamentary points of order that, if upheld, could send the revisions back to the House.

"Democrat leaders may have gotten their votes. They may have gotten their win. But today is a new day," said Senate Republican leader Mitch McConnell.

At least 11 states, including Florida, Michigan and Alabama, plan to band together in a collective lawsuit claiming the reforms infringe on state powers.

"If the president signs this bill into law, we will file a lawsuit to protect the rights and the interests of American citizens," said Florida Attorney General Bill McCollum, a Republican.

The Republican attorney general of Virginia plans to file a lawsuit in federal court in Richmond challenging the overhaul's mandate to force people to buy insurance.

Several constitutional scholars cast doubt on the prospects for success of the Republican lawsuits. "Congress has clear authority to pass this type of legislation," said Mark Rosen of Chicago-Kent College of Law.

Democratic Governor Ed Rendell of Pennsylvania, one of the states involved in the joint lawsuit, called it "nothing more than political grandstanding."

The healthcare revamp, Obama's top domestic priority, would usher in the biggest changes in the $2.5 trillion U.S. healthcare system since the 1965 creation of the government-run Medicare health program for the elderly and disabled.

It would require most Americans to have health coverage, give subsidies to help lower-income workers pay for coverage and create state-based exchanges where the uninsured can compare and shop for plans.

Major provisions such as the exchanges and subsidies would not kick in until 2014, but many of the insurance reforms like barring companies from dropping coverage for the sick will begin in the first year.

Hailed as a historic change in U.S. health policy, the bill passed by Congress left some Americans confused and others disappointed. But some saw it as a good start.

"By anybody's measure we desperately needed something in place. Is it perfect? No," said George Fleming, a career transition coach in Phoenix. "Bottom line is, I'm delighted we've got step one in place. What I think we're going to see in the next couple of months is ideas to refine it."

(Additional reporting by Susan Heavey, Lewis Krauskopf, Michael Connor, Karen Pierog, David Morgan and Tim Gaynor; Editing by Anthony Boadle and Chris Wilson)

The new bill that redefines U.S. health-care coverage will be repealed if it becomes law, some prominent Republicans predicted Monday, a day before President Barack Obama is expected to make it so.

House Democratic leaders signed the bill Monday as a matter of procedure. Obama is expected to sign the bill to make it law in a special ceremony Tuesday, White House spokesperson Robert Gibbs said Monday afternoon.

But jubilant Democrats have not heard the last of the debate, Senator John McCain of Arizona said Monday, adding he was repulsed by "all this euphoria going on."

McCain told ABC's Good Morning America that outside the Washington, D.C., area, "the American people are very angry" and don't like the bill.

"We're going to repeal this," he pledged.

Negativity could backfire, analyst says

Former presidential candidate Mitt Romney, who called the bill "unhealthy for America," said a campaign to repeal the act "begins today."

The Republicans "will challenge it every place we can," and there will be reprisals at the polls, in Congress and in the courts, McCain said.

But that strategy could backfire, suggests Stephen Hess, a senior fellow in governance studies at the Brookings Institution in Washington.

The Republicans "may have overplayed their hand," Hess told CBC News. "The sort of 'Dr. No' image that they gave as a party is certainly not very positive or very attractive."

The House of Representatives voted 219-212 in favour of the landmark legislation that has been debated on Capitol Hill for a year. It will make coverage possible for 32 million uninsured Americans and end discrimination by insurance companies against people with existing medical conditions.

Every single Republican voted against it, as did 34 Democrats.

Even if the bill is written into law on Tuesday, most of the reforms are still a long way away from being felt in the broader economy. Among the the legislation's more immediate impacts, within the calendar year 2010, seniors in the Medicare drug coverage gap will be mailed $250 rebate checks, and young adults moving from college to work will be able to stay on their parents' plans until they turn 26.

The plan's more ambitious aims — namely, to mandate that insurers must accept all applicants and won't be able to turn down people in poor health, or charge them more — are not scheduled to be rolled out until 2014. As will a plan to expand Medicaid to cover more low income people.

Obama has pledged $5 billion to fund a pool to cover individuals who lose their coverage because they get sick, but those funds are likely to run out well before 2014 when the legislation mandating that comes into effect.

Congressional analysts estimate the cost of the two bills combined will be $940 billion US over 10 years. However, the health-care reform will also trim about $138 billion from the federal deficit over the same period — through changes to Medicare and other programs, a reduction in subsidies and the taxing of high-cost insurance.

The apparent cost of the reform was too much for Dave Canelli.

"It's going to cost America a lot of money that we just can't afford," the New York resident told Reuters news agency Monday.

"I think the country needs health-care reform, but I think this bill was bad."

But for Benjamin Joy of Oregon the change is welcome.

"The U.S., being the richest country in the world, should have something like this," Joy told Reuters.

Companion package still needs passage

Congress also approved a companion package to the bill by a 220-211 vote. That package makes a series of changes sought by House Democrats to the larger bill, which already passed the Senate.

The fix-it bill will now go to the Senate, where debate is expected to begin as early as Tuesday.

Senate Democrats hope to approve it unchanged and send it directly to Obama.

Republicans intend to attempt parliamentary objections that could change the bill and require it to go back to the House.

Meanwhile, up to a dozen individual states are also vowing to try to repeal the bill.

Attorneys general in Florida and South Carolina, among others, say they'll file lawsuits claiming the bill passed by the House is unconstitutional and violates states' sovereign rights.

Undaunted, Obama is scheduled to travel to Iowa on Thursday to begin selling the health care bill to regular Americans as they prepare to go the polls in mid-term elections in November.