Two more Republican senators say they oppose their party's replacement for President Obama's health reforms, leaving leaders short of a majority.
Mike Lee and Jerry Moran both announced they could not support the bill in its current form.
Republicans hold 52 seats in the 100-member Senate, and with two other Republicans already against the bill they could not afford more desertions.
President Donald Trump made repealing Obamacare a key campaign pledge.
The current plan retains key Obamacare taxes on the wealthy, while allowing insurers to offer less coverage and imposing sharp cuts to healthcare for the poor.
The two senators simultaneously announced their opposition to the planned reforms.
While saying there were "serious problems" with Obamacare,
"we should not put our stamp of approval on bad policy".
My full statement opposing this version of BCRA: pic.twitter.com/CUq4Kibe0I— Jerry Moran (@JerryMoran) July 18, 2017
Republican leaders and the White House were left with just a few options: try to rewrite the plan, engage in a bipartisan effort to address the flaws recognised by both parties or abandon it altogether and focus on other key issues, such as tax reform.
But Senate Majority LeaderImage copyright Reuters Image caption Mr Lee and Mr Moran announced their opposition to the current draft of the bill
Reacting to what is being seen as a significant setback,
Republicans to repeal the "failing Obamacare now and work on a new healthcare plan" that would draw support from Democrats.
Republicans should just REPEAL failing ObamaCare now & work on a new Healthcare Plan that will start from a clean slate. Dems will join in!— Donald J. Trump (@realDonaldTrump) July 18, 2017
Democrats have said they will not co-operate to repeal Obamacare, but that they can work in a bipartisan way to improve it.
Senate Democratic Leader Charles Schumer
A similar version of the bill was approved by the House of Representatives in May, but analysts predicted a more turbulent process in the Senate, given the different positions.
Two other Republican senators, Rand Paul and Susan Collins, had already announced their opposition to the bill.
Congress has been delaying its summer holiday in a bid to overturn former President Barack Obama's 2010 legislation.