"Shared sacrifice" should be the catch phrase, Obama told the National Governors Association. "If all the pain is shared by one group … that's not good for anyone."
He also called for civility as states look for ways to balance their budgets. Wisconsin and Indiana are in the national spotlight because Republicans are going after public employee bargaining rights.
"I don't think it does anybody any good when public employees are denigrated or vilified," Obama said, as some in attendance shook their heads in disagreement.
Obama also announced a plan that would allow states to opt out three years sooner from one of the new healthcare reform law's more unpopular provisions. He said he believes a state should have the flexibility to seek out healthcare solutions that fit its particular needs without increasing the deficit.
"Do it," he said.
He said bipartisan legislation would push up the year states can apply for waivers to 2014 from 2017. The Empowering States to Innovate Act, introduced by Sens. Ron Wyden, D-Ore., Scott Brown, R-Mass., and Mary Landrieu, D-La., would allow states to seek waivers provided they meet certain criteria, including certifying their proposals would cover at least as many of their residents as the Affordable Care Act would have covered, the White House said.
"I will go to bat for whatever works, no matter who it comes from," Obama said, asking the governors to name a bipartisan group to work with Health and Human Services Secretary Kathleen Sibelius to look for ways to lower healthcare costs without compromising quality.
"I am not open to refighting the battles of last two years or undoing progress we've made," Obama said. "I am willing to work with anyone to make this law even better, to make care even better (and) more affordable."
He repeated themes from his State of the Union address last month, saying investment in education, infrastructure and innovation were necessary for the United States to compete aggressively in a global economy.
"We as a nation need to make sure that we are the best place on Earth to do business," Obama said.
He said he recognized states are struggling as federal stimulus money dries up and state budget deficits grow.
But, he said, American Recovery and Reinvestment Act funds "helped every single state in this room manage your budgets -- whether you admit it or not."