High premiums have frustrated many customers, especially those who receive no subsidies. But these cheaper premiums would have come with a trade-off: higher out-of-pocket costs. The plan available would have been one with deductibles of $7,350 for a single person and $14,700 for a family. The proposal would also have reallocated federal dollars that lower costs for people with modest incomes, using the money to help even the wealthiest customers pay their premiums.

Critics said approving the Iowa waiver would have paved the way for other states to follow, eroding the health law’s protections for low- and middle-income Americans. Some had planned on filing a legal challenge if the Trump administration had said yes to the request, known as a “state innovation waiver.”

“This is a case of the law’s guardrails protecting people and their coverage,” said Sarah Lueck, a senior policy analyst at the Center for Budget and Policy Priorities, a left-leaning group that had opposed the waiver. “Hopefully now Iowa can start looking at more practical and less disruptive solutions to deal with the challenges in its market.”

The Washington Post reported recently that President Trump in August had asked Seema Verma, the federal official in charge of reviewing Iowa’s plan, to reject it. Some supporters of the law saw that as a deliberate effort to keep premiums high; Mr. Trump frequently cites sharply rising premiums as proof that the health law is failing.

But Ms. Reynolds said the Trump administration had worked with Iowa “to the greatest extent possible” to get the waiver approved. The health law allows such waivers only if a state proves the alternative coverage will be as comprehensive and affordable, covers a comparable number of people and does not increase the federal deficit.