Large group plans and self-insured plans are subject to fewer federal and state requirements than individual or small group insurance. They are, for example, not required to provide “essential health benefits” like mental health care and prescription drugs.

But Mila Kofman, a former insurance superintendent in Maine who has done extensive research on association health plans, said they also often falsely claimed to be exempt from state insurance laws, as a way to explain how they could offer premiums lower than those charged by licensed insurance companies.

When small businesses having no connection with one another buy health insurance through an association today, they are still generally treated as small businesses under the law, and coverage sold to them must comply with state consumer protection laws. But that could change under the executive order.

Mr. Trump’s proposals could overturn longstanding interpretations of federal law. In numerous advisory opinions, the Labor Department has set forth an elaborate test for association health plans, saying they can be established only by a “bona fide group or association” of employers who are tied together by genuine economic interests other than just providing insurance to their employees.

The White House has suggested that the Labor Department could loosen these requirements, allowing employers anywhere in the country to join together “for the express purpose of offering group insurance.” Mr. Trump would then be taking a first step to achieve an overarching political goal. As a candidate, he often said he wanted to let Americans buy health insurance across state lines, at lower cost with fewer rules.

But history shows the risks of an expansion of association health plans. If a plan becomes insolvent, the impact on consumers can be devastating.

Robert Loiseau, who represented fraud victims in Texas, recalled their shock when they tried to receive care. “People bought insurance coverage because it was cheap and seemed to provide them with coverage they needed,” he said. “It had a veneer of legitimacy. But when they went to the doctor, they found out all of a sudden that their insurance company, their perceived insurance company, was in receivership and that they had no coverage.”