Decision No. 8 of 4 July 2012 on Constitutional Case No. 16/2011
Drawing on Art. 149, para 1, item 2 of the Constitution 60 MPs from the 41st National Assembly approached the Constitutional Court with a challenge of the constitutionality of Art. 1, para 2, line 5 and § 5 of the National Health Insurance Fund 2012 Budget Act (NHIF 2012 Budget Act) (DV, No. 99/2011). A resolution of 02.02.2012 admitted the case on its merits.
Proceedings under Art. 149, para 1, item 2 of the Constitution
The MPs claimed that the provisions they challenged were inconsistent with the Preamble of the Constitution that proclaims Bulgaria a welfare and law-abiding state, with Art. 4, para 1, Art. 5, para 1, Art. 17, paras 1, 3, and 5 and Art. 52 of the Constitution of the Republic of Bulgaria.
It was considered that Art. 1, para 2, line 5 of the NHIF 2012 Budget Act “made transfers to the amount of BGN 100 million to the Ministry of Health to make payments for medical care, pharmaceuticals and medical equipment that were supplied by the Ministry of Health in 2011”. § 5 of the Transitional and Concluding Provisions reads thus: “In 2012 payments for medical care, pharmaceuticals and medical equipment that in 2011 were financed through the Ministry of Health Budget, are paid as provided by Art. 1, para 2, line 5”, and the transfers are made on a monthly basis (§ 5, para 2).
The MPs insisted that in fact the NHIF 2012 Budget Act took away a sum of BGN 100 million from the NHIF Budget and transferred it to the Ministry of Health. In their view it amounted to some kind of seizure of part of the NHIF money. Further, the MPs claimed the BGN 100 million was taken away from the NHIF and transferred to an institution of the Executive branch of power, i.e. the Ministry of Health; however, the Ministry of Health is financed by the Central Government Budget and moreover, it is inappropriate to let a NHIF Budget finance the Central Government Budget.
The NHIF Budget raises its revenue side from different sources, the main one being the health insurance contributions. According to Art. 2 от the NHIF Budget Act the health insurance contribution “shall amount to 8 per cent”. It is money contributed by the Bulgarian citizens, by individuals who are covered by a health insurance scheme which entitles them to health care and treatment whenever a need arises. In the understanding of the MPs it is unconstitutional to seize the citizens’ money and transfer it to an institution from the Executive branch of power. The NHIF money is reallocated to meet demands other than what the money was originally earmarked for and to finance State activities as this is an unacceptable mix of sources of financing. Therefore the movants saw as anticonstitutional the forcible seizure of BGN 100 million earmarked for a special purpose from the NHIF Budget.
Having discussed the argumentation and reasoning as expounded in the challenge and the positions of the parties concerned, the Constitutional Court took into account the following in order to pronounce its judgment:
Insurance Law is a branch of law that falls under the public law branches. On the basis of their substance the social relations that are subject to this branch of law are divided into two groups; a) relations of social security; b) relations of health insurance. The core of social security relations is the individual’s financial difficulties whereas the core of health insurance is the protection and improvement of the individual’s health and the diagnosis and treatment of ailing conditions.
While the two types of relations have many features in common, a number of differences exist. It is only health insurance and its legal aspects that will be treated here and that primarily distinguish it. For instance, health insurance relations are proprietary relations. The costing of consideration such as medical care is worked out in terms of money. On that plane these relations are not different from social security relations. The main differences between them are to be sought in raising, managing and spending such money.
Until recently insurance law was seen as part of social security. However, its scope expanded when health insurance was added.
Social assistance and health insurance raise their resource from diverse sources. Health insurance spending draws on special health schemes. The contributions to those schemes are paid by the scheme-covered people, the insurers and the Government. The contributions due are based on precise actuarial estimates whereas the money needed for social assistance plans is entirely central government money. The beneficiaries are not directly involved in the contribution process.
Health insurance has reasons deeply rooted in the Constitution which provides its two pillars: the principle of the welfare state (The Preamble) and the right to health insurance (Art. 52, paras 1 and 2 of the Constitution).
The right to health insurance is a fundamental right that derives from its proclamation in the Constitution and its importance for the life of citizens. It is an irrevocable right (Art. 57, para 1 of the Constitution) and shall not be revoked by a subsequent law. The existence of this right derives directly from the Constitution as the supreme law and from the immediate effect of the Constitution prescriptions (Art. 5, paras 1 and 2 of the Constitution).
Financial arrangement is understood as receiving, keeping and spending the money that ensures the financing of health insurance. With the Pay As You Go system in place the revenue is formed primarily by the social security payments and by some other payments. By virtue of the principle of scheme coverage the revenue draws on scheme-specific sources of financial resource and specific purposes on which the money is spent. It is inadmissible to make a reallocation, i.e. to transfer money from the scheme it is earmarked for to another scheme.
Mandatory health insurance rests on the insurance contributions which are a sine qua non. They are the major source of health insurance budget receipts. The contributions are deposited in public funds like the health insurance fund. The health insurance and the taxes have many features in common just as they have many differences. However, both are declared public claims (Art. 162, para 2, item 1 of the Tax and Social Insurance Procedure Code).
Health insurance is based on schemes which means that the money it receives is raised from definite sources. Тhe money is spent on definite payments which are insurance claims.
In budget terms the fund-based organization of health insurance results in a separate fund-specific budget and its codification in a separate law. The voluntary health insurance is operated by insurance companies whose financial resource is organized along the same lines. State-managed health insurance is of extremely significant importance. It is a State-run activity and serves to enable a fundamental civil right. The participation of the central government in health insurance management is the passage of the NHIF Budget Act, the report on the spending of the NHIF Budget, the National Audit’s Office control on the spending of the NHIF Budget, etc. And finally, the participation of the central government in voluntary health insurance is to be seen in the supervision that is exercised by the Financial Supervision Commission on its activity. The forms of financial resource accumulation are determined by the economic categories and by the objective laws of development of economy. Specially important are the schemes that are a form of accumulation of resources in the finance system and the allocation of these resources to specific targets. The nature of a scheme may be defined as coupling a definite category of sources of receipts with a definite spending item. It is important to underscore that the receipts that are associated with it are resources of the fund and shall not be reallocated to ends other than what the fund exists for.
As a specific method employed to generate money in the system of finance, a fund has definite characteristic features. A fund is determined by the requirements of targeting the financial resource and is created with a specific purpose. Fund resources solve one problem or another and have a long-term special purpose.
It is inadmissible to finance the National Budget through the NHIF Budget. Beside Art. 45, para 2 of the Health Insurance Act imperatively prescribes that the medical care that is defined by the basic package is guaranteed by the NHIF Budget. Further it reads that the basic package shall be determined by an ordinance of the Minister of Health. It is inadmissible to transfer NHIF Budget resource to the Ministry of Health to be used for operations other than those that are listed in the Health Insurance Act and Ordinance No. 40.
The “budget” and “state budget” that occur in the Constitution are concepts with well known substance that is based on traditions in legislation and that has clear parameters in theory and practice. The fund-based principle is the key component of the budget law of a modern state. As such it is a component also of the economic foundation of any state, including Bulgaria. The violation of the fund-based principle is essentially a violation of the economic foundation of the state whose fundamental arrangement is to be found in the Constitution. The existing legislation contains the fund concept in health insurance though it goes there by a different designation – Art. 24 of the Health Insurance Act – that provides on what the NHIF resources may be disbursed.
To let an Annual Budget Act violate this concept is tantamount to violation of the Constitution-enshrined principle of the state committed to the rule of law.
The right to health insurance derives from Art. 52 of the Constitution. Art. 52, para 1 of the Constitution premises on the right to health as a fundamental civil right. However, the formulation is not explicit as it should be in a Constitution. The remaining Constitution provisions that arrange for fundamental civil rights define, in a positive way, the designation of the constitutional right and its substance in certain cases. An important aspect to be added to the arrangement regarding the right to health under Art. 52, para 1 of the Constitution is the complementary paragraph 2 regarding the financing to enable this right to materialize. The paragraph reads thus: “Medical care shall be financed from the State Budget, by employers, through private and collective health-insurance schemes, and from other sources in accordance with conditions and procedures established by law.” Financing “by employers and by collective and private health-insurance schemes” concerns only health insurance.
Abidance by the Constitution that reigns supreme is an expression of the rule of law in a state and no other law shall contravene it. A consistent and non-contradictory legal system that is built upon the principles of the Constitution exists in a law-abiding state. Further, material, legal, financial, organizational and human resource preconditions are needed to build a law-abiding state. The Constitution principle (Art. 4, para 1) of the state governed by the rule of law stands for rules and procedures in the exercise of power. A state committed to the rule of law is a state where governance abides by the Constitution and the laws and the latter in turn must be clearly and precisely worded and compliant with the Constitution.
In the case in question the sum of BGN 100 million is planned as a transfer in the Consolidated Government Budget to the Ministry of Health. Therefore the targets as approved by the 2012 State Budget Act and the 2012 NHIF Budget Act are interlinked.
Further, the Constitutional Court detected contradictions and ambiguities within the commented piece of legislation inasmuch as it gives different reasons for the emergence of legal relations. This is discordant with the principle of the state committed to the rule of law. Indeed, this principle warns the lawmaker against mutually exclusive legal arrangements. The Constitutional Court has abided and abides by the understanding that provisions in legislation that oppose one another are to be seen as a violation of the principle of the state committed to the rule of law.
The question arises whether money can be transferred from the NHIF Budget which is an autonomous fund to the Ministry of Health. It might be concluded that Art. 24, item 8 of the HIA, as it refers to the Annual NHIF Budget Act allows what is to be deduced from the phrase “as specified in the NHIF Budget Act for the respective calendar year”. However, in real terms this is not the case. As was mentioned, Art. 28, item 8 provides for “payments for medical care, pharmaceuticals and medical equipment for them, as specified in the National Health Insurance Fund Budget Act for the corresponding calendar year”. The cited legal text does not suggest at all that the disbursements in question may be used to finance the budget of another institution even when the beneficiary activities are the same.
Allocations earmarked to carry out activities or to finance institutions may be arranged in the State Budget Procedures Act. Since this Act does not contain any provision to the effect that part of the allocations (regardless of the sources they are raised from – health insurance contributions or budget transfers) may go to a state institution other than the rightful recipient, it is inadmissible for the Annual Budget Act to provide so. If so, the HIA and the NHIF Budget Act will be in collision. The phrase “as specified in the NHIF Budget Act for the respective calendar year” does not empower the lawmaker, in the approval of the NHIF Budget, to avoid or circumvent the earmarking process and to make allocations to an authority other than the rightful recipient. If so, this will be a case of contradiction to the principle of the state committed to the rule of law.
However, it is contradictory to the principle of the state committed to the rule of law and of legal predictability to thrust a cleavage between the Annual Budget Act and the act that determines the revenue and spending items of the respective budget. The NHIF Budget can be spent solely on activities that fall within the HIA domain of regulation. If the lawmaker wished to make transfers to the Ministry of Health, that should not be to the detriment of the NHIF Budget receipts (from health insurance contributions and transfers); this should be debited to the State Budget for the respective year.
Since Art. 1, para 2, line 5 and § 5 of the NHIF Budget Act allow transfers from the NHIF Budget to the Ministry of Health, these provisions conflict with Art. 4, para 1 of the Constitution which reads that “the Republic of Bulgaria shall be a State governed by the rule of law. It shall be governed by the Constitution and the laws of the country.” The principle of the state committed to the rile of law materializes in the requirement of guaranteed predictability and expectedness of the actions of the State whereas the provisions challenged disable the predictability and expectedness. Hence the reason to be pronounced anticonstitutional.
In terms of domestic legislation the health insurance arrangement is incorporated in Constitution texts and in the health insurance legislation that was adopted between 1998 and today. The relevant provisions in both proclaim as a fundamental civil right the right to “to medical insurance guaranteeing them affordable medical care, and to free medical care in accordance with conditions and procedures established by law.” The Constitution-proclaimed right to health insurance stands for the right of citizens to be covered by insurance schemes that the State has put in place as a set of organizational and legal mechanisms and activities.
“Affordable medical care” stands for medical care that any citizen can meet the expense of whenever he needs such for reasons of health. A citizen shall not decline to avail himself of medical care because of financial difficulties that the costs may incur. Such “affordability” of medical care creates equal opportunities for all citizens to benefit from it. Yet “affordability” is not equivalent to “cheap medical care” in absolute terms.
The Constitutional Court has ruled on the concept “affordable medical care”. In the Constitutional Court’s understanding the concept “affordable” in the sense of Art. 52, para 1 of the Constitution means the availability of medical treatment to all citizens in case of illness and equal terms and equal opportunities to avail themselves of the treatment. The “cost” factor, important as it is, is not sufficient to reveal the multiple aspects of the Constitution-defined concept “affordable medical care”.
The Constitutional Court was asked to provide a binding interpretation on Art. 52, para 1 of the Constitution. This right is fundamental and therefore irrevocable (Art. 57, para 1 of the Constitution), therefore the lawmaker shall not revoke it or restrict it by the acts it passes. The rights of citizens to affordable medical care through health insurance schemes and free of charge medical services delivery are fundamental constitutional rights.
The NHIF is the sole health insurance institution that holds a monopolistic position in its realization. It should be noted that the health insurance fund is for health insurance what the National Social Security Institute (NSSI) is for social insurance. The fund is the insurance institution as designated in the Health Insurance Act while the NHIF organizes the management and allocation process within the framework of the budget for implementation. Therefore, this budget is “owned” by the NHIF.
Председател: Евгени Танчев