Compulsory Designation of Medical CareInstitutions Case

[14-2 KCCR 410, 99Hun-Ba76, etc.,(consolidated), October 31, 2002]

In this case, the Constitutional Court upheld the statutory provision of the National Health Insurance Act designating all medical facilities as "medical care institutions" required to provide medical care

benefits stipulated by the Act.

A. Background of the Case

According to the provisions of the National Health Insurance Act,all medical care facilities are designated by law as "medical care institutions" required to provide medical care benefits stipulated by theAct. The complainant, medical doctors, filed a constitutional complaint against the instant statutory provision, arguing that it violates freedomof occupation and the right of equality.

B. Summary of the Decision

The Constitutional Court upheld the instant statutory provision ona majority vote of seven Justices as follows:

(1) Majority Opinion

(A) "The compulsory designation system," under which all hospitalfacilities are designated as medical care institutions, restricts the freedom of occupation of doctors by restricting the manners of renderingprofessional service. The permitted scope of restriction is relatively broader for freedom to conduct occupations in specific manners thanfor freedom to choose occupations. Even in such case, restriction onindividual freedom should be at a minimum level necessary to achievecertain public interests. In other words, the principle of proportionality (Article 37(2) of the Constitution) requiring that rights of citizens may be restricted only for a minimal necessary degree when suchrestriction is inevitable to achieve a certain policy objective must be observed.

(B) The legislative objective of the "compulsory designation formedical care institutions" system is to secure enough hospital facilitiesnecessary to provide medical care benefits, thereby guaranteeing the rights for all citizens to receive medical care benefits. The legislative objective is legitimate. Since designating every hospital facilityas a medical care institution responsible for providing insurance benefitswould indubitably contribute to the achievement of the above legislative objective, the appropriateness of the means is recognized.

(C) The problem, then, would be whether the "compulsory designation for medical care institutions" system is the option that infringes on the basic rights of citizens minimally among other alternatives to achieve the legislative objectives. One could argue that the legislators could have chosen the voluntary designation system, under whicha medical care institution could enter into a private contract with aninsurance company,

and that such system would function to guaranteethe right to receive medical care benefits by the insured, the citizens.

Unlike the cases when the legislators enact statutes infringing on individual's essential freedoms (i.e. right to life, bodily freedom, freedom of selection of occupation, etc.), the legislators have a broaderlegislative formative power in enacting socio-economic law. In suchcase, the Court should only review whether predictive judgment orassessment of the legislators is clearly erroneous.

The compulsory designation system may comprehensively restrictprofessional service of medical doctors. However, the basic rights restricted by such system is freedom to conduct occupations in specific manners, not freedom to choose occupations, and there is no infringement on the essential freedom. Medical professionals provide medicalservice, and the right to life and health of consumers of the medicalservice, the citizens, is dependent on medical service provided by the medical care institutions. So medical services have a very importantfunction in our society.

In this light, judgement regarding whether it violates the minimumrestriction rule to adopt the compulsory designation system should be made by reviewing whether there is a clear misjudgment on the partof the legislators.

(D) In the instant case, the legislators have adopted the compulsory designation system for the following reasons: First, the legislators have realized that it is one of the constitutional duties required ofthe state to provide citizens with medical insurance in order to achievehuman dignity and guarantee a humane livelihood, and the state cannotdelay comprehensive coverage of medical insurance until all practicalconditions are ripe for its institution; Second, since the public hospital facilities make up but 10% of the entire hospital facilities, it would beinevitable to mobilize private hospital institutions to provide medicalinsurance benefits for adequate functioning of the national health insurance system. Moreover, the state previously experienced a failure whenit temporarily adopted the contractual designation system in 1977:There was a large vacuum in medical services in particular regionsand particular areas of specialization; Many doctors opposed the predetermined fee system, and refused designation of their hospitals asmedical care institutions. In light of these facts, it is difficult to conclude that the assessment of the legislators that it would be impossible to guarantee medical service for citizens by adopting the contractual designation system is clearly erroneous. Therefore, selection ofthe compulsory designation system is not against the minimum restriction rule.

(E) Next, one could argue that "while the state could select the compulsory designation system, it would still be able to achieve thelegislative objective of guaranteeing medical service benefits even if it

recognizes some exceptions."

However, if a percentage of hospital facilities were allowed to provide medical service without being subject to medical insurance regulations, those hospital facilities that would not be able to survive free competition would desire to be included under the medicalinsurance system while other hospitals that have competitive advantageand can provide better medical service would not want to be includedin the system. In such case, medical services covered by the national medical insurance system would become second-rate, and most citizenswould prefer to receive "ordinary" medical service that would cost themdearly. Combined with demands of individuals in the upper-middleclass or upper class to be excluded from the national medical insurance system, this could threaten the existing medical insurance system.In light of these facts, the legislators may have concluded that properfunctioning of the medical service sector may not be possible if exceptions to compulsory designation were to be allowed. Since suchprediction of the legislators is not clearly erroneous, it does not violate the minimum restriction rule not to allow exception to the compulsory designation system.

(F) Let us examine whether the instant compulsory designationssystem violates the principle of equality. While the compulsory designation system designate every hospital facility as a medical care institution regardless of its facility conditions, equipment, personnel, orcapabilities, it reflects substantial difference between individual hospital facilities by differentiating medical care benefit costs and allowing certain areas of medical service that would not be covered by the insurance. In this light, the compulsory designation system essentiallytreats different hospitals differently, and therefore, it does not violatethe principle of equality.

(2) Dissenting Opinion

The compulsory designation of medical care institution is againstthe constitutional spirit based on respect for the freedom and creative initiative as well as cultural development. Most uniform control systems are inherently inefficient, and the long-term effectiveness of thesystem is questionable. Such doubt leads to the conclusion that thecompulsory designation system lacks the appropriateness of the meansrequirement necessary for legislation restricting basic rights. Thus,the compulsory designation system infringes on the freedom of occupation of medical doctors in violation of the rule against excessiverestriction, and hence, is unconstitutional.