The so-called nullification bill that Republican state legislators worked so hard to pass is now dead.
Gov. C.L. "Butch" Otter vetoed it in favor of his own executive order, which blocks portions of President Barack Obama's health care reform law.
The order says state agencies cannot implement or receive federal dollars for the Patient Protection and Affordable Care Act.
Otter said the bill, HB298 was too strict of an interpretation.
"The bill went further than what the authors intended it to do," said Otter. "It basically said you couldn't plan anything that looks like 'Obamacare.'"
The governor said Idaho has been working on a health insurance exchange for the past five years to help consumers understand their options. House Bill 298 would have handed over control of that exchange to the federal government.
In a letter to the secretary of state, Otter said the bill "can impose regulations and requirements that discourage or make it impossible for insurers to offer affordable health coverage to individuals and small employers in Idaho."
People in Idaho Falls had mixed reactions.
"I hope some big states follow, like Texas and California, that say they don't want to be part of the health care lot either," said Simon Burke.
"I think that too many people in Idaho don't have health care and this will just make it more difficult for those who can't afford health care to get health care," said Barbara Condon.
"I feel like the federal government has the right idea, that health care needs to be improved," said Christopher Hanning. "But I believe strongly that there's a better way; there's another way."
The Supreme Court is expected to eventually hear the case against Obama's health care reform.