This report has examined two policy areas: education for disabled students in the case of the Individuals with Disabilities Education Act in the United States, and in healthcare, pharmaceuticals funding policy through PHARMAC, New Zealand’s drug buying agency. It has shown that funding policies that meet some high-cost special needs leads to significant opportunity costs to the rest of the population targeted by a fixed budget. It is therefore both morally problematic and less effective in the quest for needs-satisfaction.
This report has come to two separate recommendations for policy makers. Firstly, that high-cost special needs only be funded when they do not impose significant opportunity costs on the rest of the relevant population. And secondly, that where several HCSN policies compete for funding, priority should be given to those that generate the most ‘natural units of outcome.’
One question this report has left unaddressed, due to constraints of space, is how to determine whether an opportunity cost is significant or not. The two policy examples shown are relatively uncontroversial examples of significant opportunity costs. Decision makers will often be faced with much more difficult choices to make. Determining what constitutes a ‘significant’ opportunity cost is an empirical endeavour, and should be based on policy-specific research: theoretical contributions to this problem must limit themselves to ‘if clauses.’