The civil conscription sub-clause in section 51(xxiiiA) of the Australian Constitution: no impediment to reform of Medicare
Fiona McDonald, Stephen Duckett and Emma Campbell
21.04.2023
The recent Independent Review of Medicare Integrity and Compliance highlighted that:
the current state of Medicare, and some of the challenges … are the result of previous attempts to apply discrete and band-aid solutions to single issues over time and a lack of system thinking and consideration.
One of the issues in contemplating the reform of Medicare is the long-standing debate about whether there is a constitutional impediment to implementing major reforms. This post discusses the impact of the High Court’s evolving interpretation of the civil conscription sub-clause in s51(xxiiiA) of the Commonwealth Constitution, and the implications of that response for the current and future design of Medicare as reflected in the Health Insurance Act 1973 (Cth).
History of the civil conscription sub-clause in section 51(xxiiiA)
After Commonwealth legislation to enable a pharmaceutical benefits scheme was deemed invalid by the High Court in 1946, focus shifted to amending the Constitution to enable the Commonwealth to place social services legislation on what the then Attorney-General Dr Evatt termed a ‘sound legal footing’. This initiative attracted broad cross-party support. However, Robert Menzies, then leader of the Opposition, proposed an amendment to include a proviso ‘not so to authorise civil conscription’ to the Commonwealth’s power to legislate on the provision of medical and dental services. He did this because of concerns that an unconstrained power could result in the providers of medical and dental services being involuntarily nationalised to work for the Commonwealth. This discussion in Australia was occurring relatively contemporaneously with the creation of the National Health Service in the United Kingdom through nationalisation of existing services.
The Commonwealth Solicitor-General, with two officers from the Attorney-General’s office, confirmed that ‘the only kind of legislation which the amendment would preclude would be such as compelled doctors or dentists in effect to become servants of the Commonwealth, or to have the whole of their professional activities controlled by Commonwealth direction’. The government agreed to Menzies’ proposed amendment. The Constitution was ultimately amended to include s 51(xxiiiA) and its relevant subclause: ‘the provision of … medical and dental services (but not so as to authorise any form of civil conscription)’.
The High Court’s evolving interpretation of the sub-clause
There has been limited consideration of the meaning of this sub-clause by the High Court of Australia. The first case to consider the impact of the civil conscription sub-provision was British Medical Association v Commonwealth in 1949 (‘BMA case’). This was essentially a test case brought to determine the scale and scope of the civil conscription sub-clause. The case challenged certain sections and regulations emerging from the Pharmaceutical Benefits Act 1947 (Cth). The majority in the High Court, despite the opinion of the Solicitor-General and the intention as expressed in Parliament, adopted a broad view of what ‘civil conscription’ entailed. Latham CJ (from the majority) said that civil conscription was a requirement that people work in a particular occupation, perform particular work, or perform work in a particular way. Others in the majority concurred. They found that civil conscription involved a practical compulsion to provide a service. One aspect of the legislation was found, by the majority, to require service be provided in a particular way. As a result, that section of the Pharmaceutical Benefits Act 1947 (Cth) was found to be invalid. This broad interpretation of the sub-clause presumably was influential when thinking about what might be constitutionally possible when a later Labor government was designing Medibank, the precursor to Medicare.
It took another 31 years for the High Court to hear the next challenge based on the civil conscription sub-clause. Aspects of the legislation establishing Medibank, the Health Insurance Act 1973 (Cth), were subject to challenge by a doctors group based on the presumed limitations of the civil conscription provision in General Practitioners Society v the Commonwealth (GPS). The majority adopted the test from one of the minority judges in the BMA case, distinguishing between regulating how services are provided and a ‘compulsion to serve’. The majority determined that the appropriate test was a ‘practical and legal compulsion’ to provide a service or to exclude a medical practitioner (or dentist) from providing a service. Gibbs J noted ‘the purpose of the impugned provisions appears to be to protect the public revenue against abuses of the system under which such benefits are provided’.
Whether economic pressure constituted a practical compulsion to provide a service was tested before the High Court, 29 years later. In Wong v Commonwealth of Australia; Selim v Lele, Tan and Rivett constituting the Professional Services Review Committee, the meaning of the civil conscription sub-clause was further narrowed. This case concerned the implications of an adverse finding by the Professional Services Review Committee for two general practitioners who faced a penalty of a suspension of their Medicare numbers for up to 5 years. The majority held that there may have been a compulsion to participate in Medicare, but that there was no compulsion to provide a particular service or work for the Commonwealth. Wong also clarified the extent of the scope of incidental powers – that is, any actions that are necessary or requisite to effectively exercise the particular constitutional power or any rules necessary to ensure the flow of benefits under the section. In this case, the Court found that incidental powers would be justifiable if exercised proportionately to the power and within the constraints of the civil conscription sub-clause. Kirby J stated that the Constitution requires that taxpayers’ monies are ‘lawfully and properly expended’, and that enacting detailed administrative provisions to effect this would not amount to civil conscription. The Commonwealth power to regulate the way in which doctors and dentists undertake clinical interactions should remain very limited.
There are two other highly pertinent High Court cases. Alexandra Private Geriatric Hospital Pty Ltd v the Commonwealth (‘Alexandra’) examined whether provisions of the National Health Act 1953 (Cth) relating to the provision of hospital benefits (pursuant to section 51(xxiiiA)) to approved nursing homes exceeded the Commonwealth’s powers. In Alexandra the High Court noted that it is settled that the civil conscription sub-clause attaches to the provision of medical or dental services. However, it also noted that to the extent that medical or dental services are provided pursuant to another form of provision in section 51(xxiiiA) (in this case, hospital benefits), the civil conscription sub-clause is ‘not irrelevant’. The applicant argued that some provisions in the legislation imposed significant regulatory controls on nursing homes, and that this was invalid because s 51(xxiiiA) only allows the Commonwealth to fund services, not to regulate. The High Court unanimously stated that if aged care facility fees were not subject to control by the Commonwealth, some from lower socio-economic sections of the population may not be able to take advantage of the benefit. Specifically:
It seems to us to be impossible to say that the control of fees charged to qualified nursing home patients in an approved nursing home is not a reasonable and perhaps necessary ingredient of a scheme designed to render effective the provision of sickness and hospital benefits to nursing home patients.
Broader requirements, such as quality standards, are an exercise of the Commonwealth’s incidental powers pursuant to the specific head of power. In the context of the provision of hospital benefits, it is justifiable to impose such requirements given the need to ensure patients receive quality care appropriate to the cost of the program. There are, we argue, direct parallels between the provision of hospital and medical and dental benefits, given they are both about the Commonwealth providing access to health services.
Finally, in Health Insurance Commission v Peverill (‘Peverill’), the High Court considered whether a benefit payable under s 51(xxiiiA) could be retrospectively reduced by changes to the empowering legislation. This case is pertinent to the analysis as it is about the payment of ‘medical services’ under s 51(xxiiiA). The civil conscription sub-clause is relevant, even though it was not the focus of arguments. The High Court concluded that Medicare payments were payments to patients. Thus, even if a medical practitioner was assigned those payments through bulk-billing, this did not create a contract between the doctor and the Commonwealth, nor any property interest or entitlement for payment. Instead, Brennan J described this as ‘a gratuitous payment’ and not a compulsion to provide a service. The underlying rationale was that there is a legitimate government responsibility to contain health care costs and ensure payments are used to maximum advantage for the benefit of the patient. For example, Mason CJ, Deane and Gaudron JJ stated:
Clearly enough, the underlying perception was that it was in the common interest that these competing interests be adjusted so as to preserve the integrity of the health care system and ensure that funds allocated to it are deployed to maximum advantage and not wasted in windfall payments.
They also noted that the government may consider several factors when setting the Medicare fee, including ‘the capacity of government to pay and the future of health services in Australia’.
Proportionate exercise of the power
We argue from these cases that the following principles could guide the Commonwealth when considering reforms to Medicare:
1. The Reasonable Conditions Rule – The Commonwealth can impose reasonable conditions on Medicare reimbursements to ensure value for money, including in relation to quality and equity. This rule can be derived from GPS, Wong, Alexandra, and Peverill. Peverill and Alexandra especially suggest that the High Court accepts that government ought to be able to ensure value for money and equity in the way section 51(xxiiiA) spending occurs. Thus, reasonable administrative requirements to achieve broader policy goals may be legitimate.
2. The Separation of Practice and Payment Rule – The right to practice is not a right to earn an income from Medicare. It has been argued that the critical relationship in medical and dental practice is between the doctor or dentist and the patient. The payment relationship is a matter between the patient and the doctor/dentist into which a third-party payer (in this case, the government) should not intrude. We argue that what is clear from Wong is that regulating the flow of Medicare reimbursements is allowable. Regulating payment flow is not the same as regulating clinical interactions.
3. The Voluntary Participation Rule – If a health professional voluntarily decides to participate in a Commonwealth funding arrangement the conditions of the funding arrangements bind them and do not constitute civil conscription. This rule can be derived from Alexandra and Wong. The High Court noted in Alexandra that:
If it be accepted … that the Parliament could legislate for the establishment of Commonwealth hospitals to provide nursing home care directly to patients in need of such care, there can be no objection to … inviting proprietors of private nursing homes voluntarily to undertake to provide the necessary services in return for a government subsidy. In that approach to the problem it is to be expected that the Parliament should be concerned to see that the intended real beneficiary, the patient, receives care of a quality appropriate to the cost of the programme.
There are two caveats. The first is, per Kirby J in Wong, the provision should be about payments of benefits and should not attempt to regulate the clinical sphere. If it does, a law about why, what, how, and to whom services are funded transforms into one that may infringe the civil conscription sub-clause.
The second caveat is about practical compulsion: the more medical practitioners’ (or dentists’) options are limited, the less participation is truly voluntary. But, as was expressed in Wong, there is a distinction between compulsion to practice and compulsion to participate.
4. The Alternative Sources of Power Rule – There are other powers in the Constitution which can potentially provide power for specific targeted legislation. Medical and dental services have become increasingly corporatised and could be regulated through the corporations power (section 51(xx)), as long as the clinical interaction is not the subject of the focus of the use of the power.
Conclusion
What we have shown in the paper on which this blog is based is that section 51(xxiiiA) probably does not inhibit politically feasible policy options to improve the Medicare system which, at least in part, ensures the universal provision of medical services in Australia.
For a crucial period of the last half of the 20th century into the present, the Commonwealth’s constitutional powers to make laws about the provision of medical services were seen to be strictly limited by the civil conscription sub-clause. We argue based on this analysis that the Commonwealth can take reasonable steps to ensure value for taxpayers’ money, and that a right to practice medicine is not the same as a right to bill Medicare. This opens up a range of policy possibilities for government to improve the quality, efficiency, and equity of access to health services unhampered by a perception of significant constitutional limitations.
This blog post draws from McDonald, Duckett and Campbell, 'Commonwealth power to improve access, quality, and efficiency of medical care: Does Section 51 (xxiiiA) of the Australian Constitution limit politically feasible health policy options today?’ (2023) Federal Law Review (https://journals.sagepub.com/doi/10.1177/0067205X231165872).
Fiona McDonald is an Associate Professor at the Australian Centre for Health Law Research at Queensland University of Technology and a Senior Research Fellow at the New Zealand Centre for Public Law at Victoria University of Wellington, New Zealand.
Stephen Duckett is an Honorary Enterprise Professor at the University of Melbourne.
Emma Campbell is an LLB/BPPE student at The Australian National University.
Suggested citation: Fiona McDonald, Stephen Duckett and Emma Campbell ‘The civil conscription sub-clause in section 51(xxiiiA) of the Australian Constitution: no impediment to reform of Medicare’ on AUSPUBLAW (21 April 2023) <https://www.auspublaw.org/blog/2023/4/the-civil-conscription-sub-clause-in-section-51xxiiia-of-the-australian-constitution-no-impediment-to-reform-of-medicare/>