The proclamation is set to come into effect from November 3 onwards, Efe news reported.
"While our healthcare system grapples with the challenges caused by uncompensated care, the US government is making the problem worse by admitting thousands of aliens who have not demonstrated any ability to pay for their healthcare costs," the President said in the proclamation.
The order said the move was to protect "the American taxpayer from the burdens of uncompensated care".
"An alien will financially burden the US healthcare system unless the alien will be covered by approved health insurance."
The entry for immigrants will be suspected, according to the proclamation, "unless the alien possesses the financial resources to pay for reasonably foreseeable medical costs".
Trump defended his order saying the "data shows that lawful immigrants are about three times more likely than United States citizens to lack health insurance".
"Immigrants who enter this country should not further saddle our healthcare system, and subsequently American taxpayers, with higher costs."
Apart from several strategies to reduce illegal immigration on the US-Mexico border, the Trump administration is also trying to reduce legal immigration.
On August 12, the US government issued a rule that would deny permanent residence to the legal immigrants in the country who were considered to be a "public charge" by the authorities.
Under the new rule, "a public charge in now defined as an individual who receives one or more designated public benefits for more than 12 months in the aggregate within any 36 months".
These benefits also include food assistance, Medicaid, and subsidized housing programmes.
( With inputs from IANS )