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 co-payment 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.