GOP House leaders delayed a promised vote on March 24, on the bill to repeal and replace Obamacare.
This is a massive setback for US President Donald Trump and House Speaker Paul Ryan.
The legislative test came after Trump, who was a master dealmaker failed to reach agreement with rebel Conservatives and moderate leaning Republicans.
The bill could come to a vote in some days, but the cancellation of the Friday vote was a defeat.
This is on the 7-year anniversary of Obama signing the Affordable Care Act.
House Freedom Caucus Chairman Mark Meadows RNC refused the bill after trying to get concessions to reduce requirements on insurance companies.
The Republican legislation would have halted tax penalties against people who don't purchase coverage and cut federal state Medicaid program for low income people.
The Republican bill sought to provide tax credits to pay medical bills, permitting insurers to charge older Americans more and repeal tax boosts the law imposed on health industry and high-income people.
Measures would also block federal payment to Planned Parenthood for another year.
