WASHINGTON — The Obama administration has effectively nullified a provision of the federal health law that would have allowed insurers in the small group market to charge smokers up to 50 percent more than nonsmokers.

Under the proposed regulation, employees who use tobacco can avoid paying those higher premiums if they participate in a program to quit. The regulation also allows states to eliminate higher rates for smokers altogether.

“This was the administration making lemonade out of lemons in the law,” said Erika Sward, assistant vice president at the American Lung Association, which had argued that charging smokers higher premiums would deter people from buying insurance without reducing smoking.

“We find carrots work better than sticks in helping people quit smoking,” Sward said.

Erin Reidy, associate director of policy at the American Cancer Society’s Cancer Action Network, also praised the rule, saying she hopes the administration applies it to people who buy their own insurance.

“The regulation encourages smokers to seek the help of proven services to help them quit by ensuring that smokers who enroll in tobacco cessation programs pay the same rates as nonsmokers,” she said.

But Lewis Maltby, president of the National Workrights Institute, a research and advocacy organization on employment issues, criticized the rule as “a dumb idea” that was likely to rankle employers and insurers.

“The penalty is kind of a joke if all you do is have to take a course and then can go back to smoking,” he said.

Even a smokers’ rights group gave the regulation mixed reviews.

“To hear there was a pullback of higher rates for smokers is welcome news,” said Audrey Silk, founder of New York City Citizens Lobbying Against Smoker Harassment. But she said smokers may object to having to take a class. “This is like forced behavior modification. It’s like blackmail.”