Democratic members of the House of Representatives sided with Republicans on Friday to back a bill the White House says would gut Obamacare.
The House passed the proposal by 261-157, with the help of 39 Democratic lawmakers.
The bill has little chance of making it on to the statute books. But the BBC reports it is seen as the most significant legislative rebuke yet to the law.
Mr Obama is under fire as insurance companies cancel millions of people's health insurance policies because they did not meet the stricter conditions of the law.
That was despite repeated promises by the president that people would be able to keep their existing plans.
The bill would allow insurers to sell coverage that does not meet new guidelines mandated under the Affordable Care Act.
The White House says the proposal would sabotage crucial portions of the law and has vowed to veto the bill in the unlikely event it passes the Senate.
Nearly a fifth of House Democrats voted for the bill. The BBC reports many Democrats are known to be worried that Obamacare could hurt their 2014 midterm re-election chances.
A separate issue with the law is the glitches on a federal website set up to sell the new insurance.
Fewer than 27,000 people in 36 states have successfully enrolled in healthcare policies on the federal website since it launched on 1 October.
About 79,000 managed to enrol using websites run by the other 14 states and Washington DC.
On Thursday, Mr Obama announced a one-year reprieve for those facing cancellations of their existing coverage.
The BBC reports the plan passed on Friday goes one step further - it would allow insurers to sell health coverage to new, as well as existing, customers.
Insurers have raised doubts over the Obama plan, saying it could "destabilise the market and result in higher premiums''.
