King Prawn, I don't necessarily disagree with you on the insanity of running the money through the federal govt.  But, there would have to be some sort of conference or meeting to reassure folks that when the feds gave up involvement in Medicaid, the transition to something in the States would be seamless.

Second, on the issue of coverage mandates, it would be very easy.  You could shop for a policy in any State.  Rather than, for example, in Florida where you can buy maybe 3-5 policies, you would have over a thousand.  You could tell an insurer i need coverage for X, Y and Z and then get several prices.  We do it with Auto, Home, Life, etc right now.  The idea of an exchange is a good idea, but where Obamacare gets it wrong is that it needs to be done by 1000 bureaucrats at HHS.  Ehealth.com is an example of how you would buy the coverage you need and let insurers bid on your business.

I very much like the idea of turning Medicaid into a block grant program in which States can match funds, design their own programs, but most importantly, maintain accountability and prevent fraud far better than the feds.

I think many of our problems could be solved by allowing for the interstate sale of health insurance.  For example, today, in Florida, if you want to insure people, you have to cover cleft palates, in vitro fertiliaztion, etc. regardless of the patient's age, gender, etc.  A "mandate-less" interstate sale would allow for optimum customization.  We seem to be a customization country stuck in a one size fits all marketplace.

Second, we should allow for the sale of health insurance like term life.  Why can't you, at 18, lock in a rate through age 65 and pay a premium - let insurers take a bet that you will be healthy and give you incentives (think "safe driver") to do so?  Employers could then simply offer to pay YOUR premium, but the policy would still be yours.  
These are just a few ideas, but step one needs to be full repeal, followed by the end of McCarron-Ferguson.

Great topic.  
First, to answer the question directly, no, the GOP must repeal, completely.  

But from my perspective as a first term Member, I see two reasons.

1. Credibility. What I find (and what I believe) is that if we can't pass what we say we will pass or do what we say we'll do, when we aren't in power, how can people trust us enough to keep our word, to put us in power. 

2. Policy. We are great at repealing, but ask us to present a coherent alternative vision for health care to the American people and we are like a Monty Python sketch. (I'm thinking banging coconuts, Tim the Enchanter and watery tart's throwing swords).  The public wants repeal, but they also loathe the current system.  If we don't interactively develop and present a health care alternative, we will all celebrate on repeal day, then have the endless hangover afterwards.  

This is not my area of expertise, but I'd be willing to join forces with those who know it better than I.  But we'd better create a "9-9-9" sales pitch for health care.  Simple, transformative, & effective.