Inside 21 GOP Governors' Plan to Derail 'Obamacare'

This is a rush transcript from "On the Record," February 8, 2011. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: A new headache, actually it might be a migraine tonight for President Obama -- 21 out of the nation's 29 Republican governors fired up a letter with a new plan of attack to derail health care legislation.

The letter got dropped on Health and Human Services Secretary Sebelius, but the 21 Republican governors are not just complaining about the health care law. They are demanding some very specific changes. Nebraska Governor Dave Heineman joins us live. Good evening, sir.

GOV. DAVE HEINEMAN, R-NEB.: Good evening Greta!

VAN SUSTEREN: I know you don't like this health care law, sir, so tell me, in this letter that you have fired off to the Secretary Sebelius, what is it that you are asking her for?

HEINEMAN: Greta, let me reiterate, you are right. We don't like the law. We are going to try to fight it in the courts and hopefully we can win there.

Short of that, as governors we have the responsibility to implement it. Specifically, in this letter we talk about these insurance exchanges. We want greater flexibility. Who is going to be in it? Who isn't? Who is going to pay for it? And most assuredly we are concerned about the plan design. We want greater flexibility in how those insurance plans could be drafted rather than a federal dictate.

VAN SUSTEREN: Have you seen the plans? I've looked at this federal health care law and it is daunting, about 2,700 pages shipped out for all sores rules and regulations to be added. Have you seen what the government wants to do about exchanges?

HEINEMAN: They have not provided us with the rules and regulations yet specifically on that plan design. And again, people need choices. We would rather see it operate like a free market system, and that's what we are concerned about. Can the secretary exercise a great deal of flexibility? I'm very concerned that won't happen, but I hope it does.

VAN SUSTEREN: If Secretary Sebelius did what you want and the 21 governors who signed on to this letter, would that satisfy you that the health care law may not be ideal in your mind, but would you be satisfied that the law was something that could work in your state and would be good for your citizens?

HEINEMAN: Well, we would still fight it. In fact, four Democrat United States senators have already said in recent day it is imperfect and they want to change it. My question for them is why did they vote for it in the first place? So no, this is about implementation, but we prefer not to have it at all.

The other thing that really concerns me, Greta, and you know this from history with the federal government, they greatly underestimated the cost and overestimated the savings in this bill.

VAN SUSTEREN: The thing that is curious, you have this mandate that is one of the primary ways this bill is going to be funded. That has been thrown out in Virginia and federal court in Florida if that holds up in Supreme Court, and I don't any which way the Supreme Court is going to rule if it does it is out you have a funding problem there.

Then you have the problem with some states complaining the Medicaid expansion is going to be painful financially to the states. Now you tell me these insurance exchanges you don't know what the cost is because you haven't seen the rules and regulations are that you don't know what you are facing. Is that a fair statement?

HEINEMAN: That's right. We are very, very concerned. I suggested why don't we suspend this federal health care law for two years to work through the court, and we'll know with certainty how the United States Supreme Court is going to rule?

Secondly, in the meantime they could figure out how to make this a better bill. We all know that health care system can be made better. But this bill didn't do it. It didn't really address the cost of medical care, the cost of skyrocketing premiums.

VAN SUSTEREN: Is Nebraska in the Florida litigation?

HEINEMAN: Yes, we've been part of it from the beginning.

VAN SUSTEREN: Here's an idea. Instead of asking that the federal government suspend the health care legislation for two years, why don't you ask your attorney general and why don't you join him or her to go to President Obama and say would you please instruct the Justice Department or ask the justice department to join us in going right to the Supreme Court now, because this could be decided in 60 days.

Then you wouldn't need to suspend it for two years and you would know in 60 days, I guess it isn't a complicated legal issue it is the matter of the Supreme Court deciding it. Why didn't you push for a fast track?

HEINEMAN: Well, Greta, we're going do that. I've listened to you the last week or so and I'm in full agreement with you. Let's get this thing decided. You are likely to see a letter from a number of governors in the coming days act asking the Obama administration to do that. Certainly our attorney general and I support definitely support this fast track. And I'm with you, even though I'm not a lawyer, but this could be decided in the next 60 to 90 days.

VAN SUSTEREN: I'm very flattered that you have been watching governor, thank you. Thank you for joining us.

HEINEMAN: Thank you.