Observation (CEACR) - adopted 1998, published 87th ILC session (1999)

Social Security (Minimum Standards) Convention, 1952 (No. 102) - Croatia (Ratification: 1991)

1. Article 10 of the Convention, in relation to Article 69. With reference to its previous observations, the Committee recalls that the Union of Autonomous Trade Unions of Croatia (SSSH) alleged, in comments communicated in March 1995, April, September and November 1997, that, since the entry into force of the Health Insurance Act on 13 August 1993, a large number of workers in Croatia have been denied health protection on the basis of its section 59 (remaining unchanged in the revised text of this Act published in the Official Gazette No. 1/97 of 3 January 1997). Section 59 provides, in particular, that for contribution payers who fail to pay the insurance contribution, the use of health protection funded by the Croatian Institute for Health Insurance shall be reduced to the right to emergency medical aid only. While drawing the Government's attention to the fact that Article 69 of the Convention, which enumerates the cases in which benefits provided under the Convention, including medical care, may be suspended, does not refer to the situation of non-payment of contributions on behalf of the insured person, the Committee asked the Government to indicate the measures taken or contemplated to bring its national legislation and practice in this respect into compliance with the Convention. It has also asked the Government to supply a copy of the decision, once adopted, of the Constitutional Court of the Republic of Croatia at the request of the SSSH to pronounce on the constitutionality of section 59 of the Health Insurance Act, as well as the Government's written reply, requested by a Member of Parliament, on the measures contemplated in order to harmonize section 59 of the said Act with the Croatian Constitution and Convention No. 102.

In its latest report, the Government provides detailed information on the questions relating to health insurance, in particular, and supplies the text of the ruling of the Constitutional Court of the Republic of Croatia handed down on 15 July 1998 to initiate the procedure of assessment of constitutionality of section 59, paragraphs 2 and 3, of the Health Insurance Act. The Government also refers to the discussion concerning this case at the Conference Committee in June 1998.

At the Conference Committee, the Government representative stated that in the Croatian health insurance system the obligation to make the payment of the employees' contributions lay with the employer, who was defined as a "contribution payer", while self-employed persons and equivalent groups were obliged to pay the contributions themselves. Under section 59(2) of the Health Insurance Act, the right to health care could only be restricted for persons who were obliged to pay contributions themselves. This provision did not therefore constitute an authorization to restrict the right of employees to health care. The Croatian Institute for Health Insurance maintained a list of persons who were obliged to pay contributions themselves and of those whose right to health care was restricted for the non-payment of contributions. It also maintained a list of legal and physical persons whose payments of contributions for employees were also more than three months overdue. The existence of the two lists was misleading, since it might wrongly be assumed that section 59(2) also referred to the second list. The problem of the collection of insurance contributions in the country had worsened in 1995 and 1996 as, in the general economic and social situation affected by war and transition, the employers were faced every month with the problem of payment of wages, including the payment of health and pension insurance contributions. The Institute endeavoured to resolve such problems by making special arrangements with the employers for the deferral of contributions. In 1996, the Government requested the Institute to keep records of contribution arrears and, within the framework of the programme for the rehabilitation and restructuring of enterprises in difficulties but which had good prospects of recovery, it had transferred insurance claims to the state budget, thus providing considerable resources for health and pension insurance of employees in these enterprises. According to the Government representative, it was clear that the SSSH's allegations of a massive denial of the right of employees to health care was not correct. The Government was aware that the problems of the financing of health care could only be resolved by the recovery of the economy, by a reduction in unemployment and a reform of the health-care and health insurance systems. A commission had therefore been established for the reform of these systems, in which representatives of workers and employers would be involved. The Government would also welcome assistance from the ILO in this respect.

The Committee takes due note of the information and explanations provided by the Government and of the discussion which took place in the Conference Committee on this case. It notes that the Government representative insisted that section 59(2) of the Health Insurance Act could not be legally interpreted as an authorization for restricting the right to health protection of employees; that, since the beginning of the year 1998, not a single worker had been deprived of this right; that the list of persons whose right to health protection was restricted for the non-payment of contributions, maintained by the Croatian Institute for Health Insurance, concerned only those persons who were obliged to pay contributions themselves; and that the second list maintained by the Institute, that of legal and physical persons whose payments of contributions for employees were overdue for more than three months, was not related to section 59(2) of the Act. The Committee recalls in this respect that the two letters, dated 24 June and 23 July 1997, submitted by the SSSH and referred to in the Committee's previous observation, sent respectively by the Institute to its regional offices and by the regional Zagreb office of the Institute to health centres and physicians, in their English translation expressly stated that the reduction of benefits to health care payable by the Institute was to be applied to "all employees, and members of the families, of contribution payers who have not partially or totally settled their obligations towards the Croatian Institute for Health Insurance for three months and more". For this purpose, according to the first letter, the regional offices of the Institute were placed under an obligation to inform its Department for the Collection of Contributions of "the name of the contribution payer -- a legal person", with the exception of certain specified joint-stock companies, indicating the number of the policy and the date of reduction. As regards "other contribution-payers (persons engaged in economic activity, professional activity or those who are paying contributions themselves and others)", their total number was to be communicated. From the text of these instructions it is difficult not to conclude that the list of the legal persons who failed to pay contributions for their employees was being maintained by the Institute for the express purpose of reducing health care in respect of their employees and members of their families under the provisions of section 59(2) of the Health Insurance Act. The Committee further notes that the Worker members in the Conference Committee, including the Worker member from Croatia, pointed out during the discussion of this case that one of the most significant socio-economic problems in the country was the non-payment of wages to approximately 100,000 workers by their employers, who at the same time did not pay the workers' health insurance contributions. According to trade union sources, there had been a number of cases in which medical care had been denied to such workers, and since section 59 was open to very different interpretations, it was necessary for the Government to proceed with modifications to the law, so that clear and unambiguous provisions could be adopted. Finally, in its conclusions, the Conference Committee had invited the Government to indicate in its next report the measures taken or envisaged to bring its national law and practice into conformity with the Convention, in particular as regards section 59 of the Health Insurance Act.

The Committee notes that the Government's latest report, which was received in September 1998, does not mention any measure which would attest to a change in the situation. However, it notes with interest the ruling handed down by the Government of the Constitutional Court of the Republic of Croatia referred to above, in which, having examined the allegations of the SSSH and the provisions of the legislation, the Court decided that there were sufficient grounds to open the procedure for questioning the constitutionality of the provisions of section 59, paragraphs 2 and 3, of the Health Insurance Act without waiting for the corresponding statements requested from the competent bodies. The Court pointed out that general medical care, specialist health care and hospitalization were indissociably included in the right to health protection, and that limiting coverage to emergency medical care, with the total exclusion of other forms of health protection, called into question the basis of the said section, paragraph 2, as it was in contradiction to the provision of the Constitution guaranteeing to every citizen the right to health protection. The Court also recalled that the Institute had the possibility to claim, through the body empowered to collect the funds and on the basis of the decision of a tribunal, the payment of unpaid insurance contributions and the transfer of the corresponding amounts from the bank account of the contribution payer to the Institute. Taking into account that the insured persons did not have the power to exercise any influence on the person who was obliged to pay their contributions, and sustained damage when this person failed to pay them, the Court considered that the constitutionality of section 59, paragraphs 2 and 3, reducing health protection seemed doubtful. Furthermore, in its opinion, there were good reasons to believe that these provisions were also in conflict with Convention No. 102, which forms part of the legal order of the Republic of Croatia and which, by virtue of section 134 of the Constitution, has primacy over national law.

In this situation, the Committee trusts that in its next report the Government will not fail to supply detailed information on the measures taken to ensure that section 59 of the Health Insurance Act is not interpreted in law and used in practice so as to reduce the right to health protection of the insured workers (and their dependants) whose employers have not paid contributions on their behalf. It hopes that, in the immediate future, the Government will use its authority to request the Croatian Institute for Health Insurance to issue new instructions to its regional offices and to health centres and physicians expressly requiring them not to reduce health care with respect to employees (and members of their families) of contribution payers who failed to pay contributions on their behalf, and to take all other steps necessary to ensure that such practice will not be repeated. It also hopes that the question of compliance with Articles 10 and 69 of the Convention in this respect will be brought to the attention of the commission established to proceed with the reform of the health-care and health insurance systems, referred to by the Government representative at the Conference Committee, and that the Government will supply information on its work. In addition, the Committee would like the Government to supply the text of the final decision of the Constitutional Court, once handed down. Finally, it would like to draw the Government's attention to the possibility of requesting the necessary assistance from the competent technical department of the Office.

2. With reference to its previous observation, the Committee has examined the questions raised by the Association of Clubs of Military Retirees of the Union of Retirees of Croatia, in its communications received in April and August 1997, with regard to the application of Conventions Nos. 48 and 102, together with the Government's written reply received in November 1997, as well as the oral explanations given by its representative in the Conference Committee in June 1998. It has also taken note of the comments of the said Association, dated 17 October 1998, on the Government's latest report on the application of Convention No. 48. The Association alleges partial implementation by Croatia of the obligation it assumed in 1991 to take over the payment of pensions due to army pensioners of the former Federal Army (JNA) with continuous residence in Croatia. It specifies that the amount of the pension paid to the above-mentioned retirees as from 1 January 1992 by the Republic of Croatia constituted only 63.22 per cent of the amount of the pension to which they were entitled in December 1991, and that all subsequent adjustments of pensions have not changed the situation. In its reply, the Government states that the military pensions of the former Federal Army paid in December 1991 reflect a special increase of 40 per cent which has been given to the officers of the JNA on active service as a pay increase. The criterion for setting military pensions at 63.22 per cent of the pension amount of December 1991 was arrived at by equating the highest amount of military pension to the highest pension paid out of the Republic Fund for the Retirement and Invalidity Insurance of the Workers of Croatia; this ratio was used to determine the amount of all of the other military pensions. Starting from 1 January 1993, military pensions were increased so that in real terms they attained 73 per cent of the level of December 1991. The Government also stated that military pensions are being adjusted in the same way as pensions of all other classes of retired persons. While taking due note of this information, the Committee would like the Government to include in its next reports information on any further increases and regular adjustments of the pensions of the military retirees concerned.

[The Government is asked to report in detail in 2000.]