States fear Obamacare could cause thousands of very sick people to lose insurance coverage.
The pre-existing condition insurance plan is a lifeline for those considered "uninsurable."
The program is in danger, however, because the federal government has capped spending at $5 billion. States are expected to pay the rest.
"Enrollees also appear to be at risk of increases in both premiums and out-of-pocket costs that may make continued enrollment cost prohibitive," Michael Keough, chairman of the National Association of State Comprehensive Health Insurance Plans, wrote in a letter to Health and Human Services Secretary Kathleen Sebelius.
The official also warned of "large-scale enrollee terminations."