Obama's endorsement of legislation Monday that would give states such freedom three years earlier than the 2010 law allows was panned by Republicans more interested in repealing the entire law or getting the U.S. Supreme Court to declare it unconstitutional.
On the other hand, the president's move was applauded by lawmakers in Vermont who want to go even further than the federal law, which is designed to cover 32 million more Americans with health insurance. The law will expand Medicaid and create a system of health exchanges, or marketplaces, in which insurers compete for customers.
"The president's embracing this proposal is good 'put up or shut up' politics," says Robert Laszewski, a private health care consultant. "He is challenging all of these Republican governors who have control of both houses of their legislatures to put a better idea on the table and show the country why it's better."
The law is being phased in, with the major provisions starting by 2014. States could not opt out entirely. Key requirements would remain, such as those prohibiting insurers from canceling coverage because of pre-existing conditions.
States can ask Washington for a waiver from other provisions, such as the law's mandate that all individuals get insurance — but they would have to cover as many people, provide the same level of benefits and not raise the federal deficit.
"A state may not like the way the (federal law) is providing that coverage and could argue that other ways would be more appropriate, but they still have to come up with a way to do those three things," says Laura Tobler of the National Conference of State Legislatures.
In his address to the governors, Obama quipped that many are not in the health law's "fan club." But he urged them to work together to put it into practice and offered faster state flexibility as an olive branch. Obama also has agreed to two other, less sweeping changes, including one that would ease tax reporting rules for small business.