In a television interview, Office of Management and Budget Director Mick Mulvaney said the Trump administration would be fine with jettisoning a proposal to repeal the ACA's individual mandate if it becomes a hindrance to passing the tax bill, which is Republicans' top legislative priority.
"If we can repeal part of Obamacare as part of a tax bill and have a tax bill that is still a good tax bill, that can pass, that's great," Mulvaney said on CNN's "State of the Union." "If it becomes an impediment to getting the best tax bill we can, then we are OK with taking it out."
He said it would ultimately be up to House and Senate negotiators to figure it out.
Mulvaney's comments came as party leaders race to try to get a tax bill to Trump's desk by year's end. Despite controlling both Congress and the White House, they have failed to produce any other sweeping legislative accomplishments.
The Republicans seek to pass a far-reaching plan to simplify the tax code and slash rates. The majority of the cuts would go to corporations and wealthy Americans.
The House passed its version of the plan last week. The Senate intends to take up its own legislation on the Senate floor when lawmakers return from Thanksgiving recess.
One key difference between the bills is the repeal of the individual mandate. In a strategy shift, Senate GOP leaders added the repeal to their plan last week. The House bill does not include it.
Adding the mandate repeal freed up more than $300 billion in additional revenue, according to the nonpartisan Congressional Budget Office, allowing Senate Republican tax writers more flexibility to pay for the deep tax cuts they seek.
It also gave Senate Republicans an opportunity to go after the law known as Obamacare, which they have failed to repeal and replace despite years of promises to the conservative base to do so.
But the CBO also found that 13 million fewer Americans would have health insurance after 10 years and that insurance premiums would rise by 10 percent.
Some Republican senators who have resisted their party's efforts to shred the ACA have approached with caution or hostility the idea of repealing the individual mandate with the tax bill.
Sen. Susan Collins, R-Maine, reiterated her opposition to the idea on Sunday. Last week, Sen. Lisa Murkowski, R-Alaska, said a recent bipartisan compromise aiming to stabilize insurance markets was "important" and would be "particularly so" if the individual mandate was repealed.
If the health-care language is stripped from the bill, Senate Republican leaders could be forced to change the plan dramatically. Possibilities include making corporate tax cuts temporary rather than permanent and cutting back on a proposed expansion of the child tax credit.
Collins, a centrist who has voiced several worries about the Senate bill, said on ABC's "This Week with George Stephanopoulos" that the "biggest mistake" was including the individual mandate repeal.
She expressed hope that it would be dropped from the proposal or that a plan pushed by her and other senators to mitigate its effects would be adopted. Collins did not say how she would vote on the bill, voicing a belief that the measure will change.
Speaking on the same program, White House legislative affairs director Marc Short said the White House is "very comfortable with the House bill" because it achieves its top priorities on taxes. He noted that the House bill does not include the mandate repeal.
But he also praised the Senate's inclusion of it, saying he believes the individual mandate is hurting middle-class families.
On "Fox News Sunday," Treasury Secretary Steven Mnuchin said the mandate repeal is not a "bargaining chip. The president thinks we should get rid of it. I think we should get rid of it."
Still, neither Mnuchin nor Short said it was a must-have in the final bill.
The individual mandate requires most Americans to obtain health insurance or pay a fine. Including it in the Senate bill gives GOP leaders more revenue to work with. It reduces the amount of subsidies the federal government would have to pay to help people purchase coverage, without any requirement that they have it.
A substantial portion of the savings, according to the CBO, would come from close to $179 billion in reduced Medicaid payments over 10 years because people would also drop out of that program if there was no penalty for bypassing insurance coverage.
Asked Sunday whether Senate Majority Leader Mitch McConnell, R-Ky., would be willing to remove the mandate repeal if it becomes an impediment, Don Stewart, a McConnell spokesman, declined to say one way or the other.
Senate Republicans must be especially mindful of budget math since they are trying to pass the bill through a process known "reconciliation," which requires only a simple majority vote. The total tax bill, according to budget rules, can add only $1.5 trillion to the debt over 10 years, and it cannot add to the debt beyond that window.
Republicans hold a 52-to-48 advantage over Democrats in the Senate. So if no Democrats vote for the bill, Republicans can afford only two "no" votes in their ranks, with Vice President Mike Pence breaking a tie. Already, Sen. Ron Johnson, R-Wis., has come out against the plan without changes.
The margin for error could tighten next month. Recent polls show the Democratic candidate leading the Republican ahead of the Dec. 12 special election for a Senate seat in Alabama that has long been in GOP hands. The prospect of losing that seat has given Senate GOP leaders added incentive to try to pass their bill before then.
Sen. Roy Blunt, R-Mo., a top McConnell lieutenant, predicted on NBC's "Meet the Press" that the Senate bill would pass. If the Senate passes its legislation, it would have to work out its differences with the House version.
Blunt said he thinks the House and Senate bills are "very reconcilable" — even with the inclusion of the individual mandate repeal.
Democrats have forcefully criticized the GOP tax plan, arguing it would benefit the wealthiest Americans.
On CNN's "State of the Union," Sen. Bernie Sanders, I-Vt., called it a "terrible, terrible piece of legislation." He said making the cut to the corporate rate permanent but the individual rate temporary in the Senate bill was "absolutely crazy."
The Washington Post's Sarah Kaplan and Mike DeBonis contributed to this report.