RUTHFULLY YOURS

One piece of this week’s order directs the Labor Department to “consider expanding access” to Association Health Plans, which would allow small businesses to team up to offer insurance. The purpose is to let trade groups form insurance risk pools across state lines and enjoy economies of scale. Many large companies are freed from state and some federal benefit mandates and operate under a law known as Erisa. Smaller businesses deserve similar flexibility.

More association plans might start to reverse the decline in small business coverage, and a White House fact sheet notes that the share of workers at small firms with employer coverage has dropped to about one-third in 2017 from almost half in 2010.

The order also seeks to expand the flexibility and use of health-reimbursement arrangements, which allow employers to pay back employees for health-care expenses with pretax dollars. This could be a step toward equalizing the tax treatment for smaller businesses that don’t offer coverage and thus don’t qualify for the subsidy known as the employer tax exclusion.

A third part of the order directs cabinet agencies to consider new rules on short-term insurance plans, which the Obama Administration restricted for the mortal sin of popularity. The plans traditionally could run for a year and often cover catastrophic events with relatively broad networks of doctors and hospitals. This can be a lifeline for folks between jobs.

But an Obama rule that took effect earlier this year limited the duration of the plans to 90 days. ObamaCare’s central planners hated that so many people were choosing the short-term options that can cost a third of standard plans. The Obama Administration said short-term plans don’t qualify as “minimum essential coverage” under ObamaCare, though it sure beats the risks of going without insurance.

The short-term market has historically been minuscule, but perhaps demand will be higher now given that average ObamaCare premiums have increased dramatically since 2013. One unknown is how many insurers will participate or what coverage will be included. Presumably the Administration will certify the plans as compliant with ObamaCare’s coverage mandate, though the executive order doesn’t say.

ObamaCare’s defenders are calling all of this “sabotage” and warning about “adverse selection,” in which a more robust individual market will siphon off the healthy customers that prop up ObamaCare’s exchanges. They predict a death spiral of higher premiums for the sick or elderly left on the exchanges.

Yet the ObamaCare exchanges were deteriorating long before Mr. Trump arrived, as the young and healthy and insurers fled. Enrollment is 60% lower than the Congressional Budget Office predicted, which is impressive even by CBO’s record of missing the mark. Some 6.7 million people paid a tax in 2015 rather than buy coverage they don’t want or can’t afford.

If the small-plan and association markets grow enough, perhaps the exchanges could over time become high-risk pools that subsidize care for the sick, as the Juniper Research Group’s Chris Jacobs has suggested. What eludes the Socratic dialogues of Jimmy Kimmel is that the small percentage of Americans with pre-existing conditions need help paying for known problems, not unexpected events built into the price of insurance. This can be done without burying the costs across higher premiums for everyone, as ObamaCare does.

The downside of the executive order, and it’s considerable, is that these are all regulations that could be changed by, say, President Bernie Sanders. Reform by statute would be far more durable. So it was surprising to see Kentucky Senator Rand Paul all over cable-TV Thursday taking credit for the new rules after he did so much to scuttle ObamaCare repeal in Congress. He’ll need more than this for absolution.

The association-health plans in particular will require what the White House calls a “broader interpretation” of the Erisa law. Any legal judgment will await the fine print, but this is the kind of rule by regulation that will have to withstand inevitable court challenge.

The order’s practical effect thus won’t be known for months, though the agencies ought to move quickly to mitigate as much damage as possible in next year’s markets. The executive order isn’t the sabotage Democrats claim but neither is it the political salvation some Republicans hope. Republicans shouldn’t use these modest improvements as an excuse to avoid pushing more durable legislative reform.