"Without us, people would have to quit their job to get poor enough to be on Medicaid."
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The challenge from a coalition of 20 US states is now likely to go to the US Supreme Court.
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While America dissects the president latest tweets, he is dismantling Obamacare by inches.
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Donald Trump is not the only Republican to accuse opponents of seeking to bring socialism to the US.
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Elderly, disabled and pregnant recipients of the low-income health scheme would be exempted from the policy.
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The move comes after a bipartisan healthcare fix stalled within one day of its announcement.
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The decision is described as a "spiteful act of vast, pointless sabotage" by Democrat leaders.
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The new action would make it easier for Americans to buy stripped-down, cheaper polices.
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As Republicans in Congress fail to repeal Obamacare, President Trump has hinted at other options.
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The party leadership said there would be no vote this week on their bill, after support ebbed away.
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