The president denied that he is "big-spending Obama", telling Republicans and other critics that he will not sign a health care bill that swells the deficit, the highest on record.
Obama did not give details on how the healthcare overhaul would be paid for, but he said that Americans making $250,000-a-year or less would not face heavy taxation to find the changes.
"It was always going to be a tough issue, no matter how popular Obama was," Rob Reynolds, Al Jazeera's senior Washington correspondent, said.
"Congress will come back in three weeks or so and try to pass this legislation and pass it to Obama. But if the opponents keep up this pounding for three weeks it may become politically treacherous for any congressman to sign on with Obama's plan."
The divisions over Obama's plan, which aims to regulate insurers and push down the cost of medical care, were highlighted outside the high school where Obama delivered his address.
Those in favour of changes to the US health care system waved signs saying, "Insurance companies are enemies of change" and "All Americans deserve affordable healthcare".
On the other side, opponents of Obama's proposals carried banners saying "Obamacare, down the chute granny" and "Hands off my healthcare".
But there is evidence to suggest that the healthcare industry is involved in manipulating the opposition protests, Reynolds said.
"For example, one of the groups called the Conservatives for Healthcare Reform is run by a man who was formerly head of a huge corporation called HCA that ran hospitals for profit," he said.
"He was later fired after that company engaged in the largest healthcare fraud in US history."
Obama's approval rating on healthcare has dropped in recent weeks amid claims that he is trying to push through a government takeover of the $2.5 trillion healthcare system.
"Your health insurance should be there when it counts, not just when you're paying premiums but when you actually get sick, and it will be when we pass this plan," Obama said to the 2,000 people at the event.
The president moved to assure senior citizens that an overhaul of the health system would not lead to cuts in the budget for Medicare, a system which provides medical insurance.
“We are not talking about cutting Medicare," Obama said, telling the crowd that the American Association of Retired Persons, a non-governmental organisation, supports his plan.