By Susan Cornwell
(Reuters) - Iowa on Monday withdrew a request to waive some Obamacare rules to help shore up its struggling healthcare insurance market, marking a setback in efforts by Republican-governed states to sidestep requirements of the Obama-era law.
With open enrollment for the Affordable Care Act - better known as Obamacare - set to start in just over a week, the state announced it would no longer wait to hear if federal officials would approve its request aimed at cutting individual healthcare insurance premiums and widening coverage.
The withdrawal prompted a leading U.S. Senate Republican to urge Congress to approve a bipartisan fix to Obamacare, which President Donald Trump has vowed to scrap.
Iowa was viewed as a test case by some for other states that submitted similar, if far less-reaching, waivers and of how the Trump administration would respond to such requests.
Iowa Governor Kim Reynolds said the law had not been flexible enough to accommodate the state's request.
"Ultimately, Obamacare is an inflexible law that Congress must repeal and replace," the governor said in a statement, adding that premiums under Obamacare had increased by 110 percent for Iowans since 2013.
Iowa sought the waiver after its individual healthcare marketplace shrank to only one insurer for next year, Minnesota-based Medica.
Some of the state's requests were similar to provisions included in Republican repeal and replace bills this year. For instance, the waiver sought to replace Obamacare's income-based tax credits with flat age-based credits and eliminate insurer payments that Trump cut off earlier this month.
Senator Lamar Alexander, Republican of Tennessee, said the move by Iowa demonstrated the need for repairs to Obamacare that he and Democratic Senator Patty Murray have proposed aimed at stabilizing insurance markets. It would also provide states more flexibility in reshaping some parts of Obamacare.
Trump has sent mixed signals over whether he would support the bipartisan fix. Senate Majority Leader Mitch McConnell said on Sunday that he was willing to bring up the proposal for a vote but needed to know where Trump stood.
Alexander said the bipartisan repair proposal would allow the federal government to approve Iowa's waiver.
Alexander told reporters that the Congressional Budget Office, a nonpartisan scorekeeper, would soon announce its analysis of the bipartisan repair legislation, possibly on Tuesday.
(Reporting by Susan Cornwell,; additional reporting by Yasmeen Abutaleb and Amanda Becker in Washington; Editing by Andrew Hay)