National Review's Reihan Salam writes about what he calls the "Affluence Trap" in which we have much to lose but are not wealth enough to afford the consequences of bad policies. I take Salam to mean unsustainable entitlements and growth weakening industrial policies, but I think that the idea of the affluence trap is useful in understanding the political constraints on conservative reformism.
Over at NRO's health cate blog, John R. Graham writes that "Establishment Republicans are loathe to remove the discrimination against individual ownership of health insurance for employed people because their backers in Big Business support the status quo." I think this is more wrong than right. I think that Graham especially understates the role of public opinion in moving very quickly to a system dominated by individually bought health insurance. Every opinion poll that I have seen indicates that the vast majority of Americans are happy with the level of health care services that they receive. They might have problems with the rate at which premiums are rising and being stuck in jobs they might not like, but the standard of health care services they do like breeds an intense risk averseness. Tax changes that destroy the market in employer-provided insurance plus a tax credit for buying individual policies seem like a bad deal. The tax credit doesn't seem to buy as much insurance. There are all kinds of questions regarding preexisting conditions.
You can argue that expanding the individual market will stimulate all kinds of innovation that will both bring down cost, improve quality of service and increase take home pay. But those are speculative gains and I can see why people might not want to let politicians and policy wonks play "we bet your family's life" with changes in the health insurance market.
Graham argues that McCain's health care plan to transition to an individual insurance policy system ran into a "buzzsaw" of interest group opposition. That is true, but it also ran into a bunch of Obama ads that told the general public that McCain's health care plan will take away your employer-provided insurance and force you to buy inferior insurance on the individual market. This isn't to say that interst group politics aren't important at the margin, but the biggest obstacle to Obama's (and before that Clinton's) health care plan has not been Big Business, but public opinion that thinks that the changes will injure their quality and affordability of care.
Any conservative reform that actually happens will have to take account of both economic and political reality. And the politcal reality is that the biggest problem with simply changing the tax code to destroy the market in employer-provided private health insurance is not that Republicans are big business stogges, but the force of public opinion.