The administration’s efforts to make it easier for states to change their health insurance markets could strengthen the pool of covered patients, but that might hurt lower-cost plans, health-care industry participants said.

“States can redistribute the federal money that’s available in a way that would attract a broader mix of coverage,” Greg Fann, a senior consulting actuary with health-care actuarial firm Axene Health Partners LLC in Temecula, Calif., told Bloomberg Law. That could attract younger people into the market, which...