The redistributive effects of a parent support co-payment

The main threat to the sustainability of public finance in the Netherlands is the very high level of long-term care (LTC) expenditures. Therefore, this research focuses on the redistributive effects and the governmental revenues stemming from the implementation of a German LTC financing system in the Netherlands, the so-called “Elternunterhalt”, or “parent support co-payment (PSCP)”. In this system, adult children of LTC users contribute to the LTC expenditures of their parents by financing a co-payment, while the LTC users themselves finance an additional copayment on top of their current one. The implementation is replicated by using calculation rules from the German Elternunterhalt and unique data that combines LTC use and wealth/income of the Dutch population. The results indicate that the PSCP system can increase revenue; however, they also show that it often leads poorer parents and children to pay a higher co-payment,relative to their income and assets, than their richer counterparts.