Cyril Cotterall-Debay

Policy makers must make morally difficult decisions about allocating resources. In conditions of resource scarcity and fixed budgets, we can find conflicts of rights and of needs. Not all needs can be satisfied to the same extent, and some needs are much more costly to meet than others. Nowhere is this more apparent than in the fields of education and healthcare. Some disabilities are very difficult to cater to; some pharmaceuticals require vast amounts of capital merely to get to trial stage. In a world in deep financial recession, policy makers are more than ever confronted with shrinking budgets. Making the most of those budgets is therefore of crucial importance.
This report applies a cost-effectiveness analysis to two case studies: the Individuals with Disabilities Education Act in the U.S., and New Zealand’s drug buying agency, PHARMAC. Through an analysis of their resource allocation procedures, this report argues that in cases of fixed budgets, the requirements of efficiency and morality often meet. It ends with two recommendations for budget makers:
• High-cost special needs should only be funded when they do not impose a significant opportunity cost on the rest of the relevant population.
• Where several high-cost special needs policies compete for funding, priority should be given to those that generate the most ‘natural units of outcome.’