Older people in England could be asked to take out insurance to pay for long-term care in their old age. The idea is thought to be one option proposed by ministers in a green paper due on Tuesday on reform of funding of residential and home-based social care. The current system of means tested social care for elderly and disabled people is widely regarded as unfair. Experts also warn it is unfit for our ageing society. Ministers admit the current system is struggling to cope with the huge pressures already being put on existing care services. And experts warn demand for social care is likely to intensify.

Already it is estimated that half of women and a third of men over 65 will need long-term care at some point. And the number of people aged 85 and over is predicted to double over the next 20 years. At present, there are four people earning for each one who is retired, but in 40 years that ratio will fall to just two to one.

In Scotland the provision of free personal care has proved popular, but very expensive. It is thought unlikely that ministers in England will adopt a similar policy. But they concede that a new system is required to deal with a situation that threatens to create a £6bn black hole in finances over the next 20 years.

Under the present system anyone with a home or savings of £23,500 or more is not given state funding for a care home, or help from social services. This means that thousands of pensioners each year have to sell their homes or use their savings to fund their long-term care, which critics say is unfair and unsustainable.

The new green paper is thought likely to propose the current system is replaced. One option thought to be under consideration is for an insurance-based scheme which would allow people to protect their homes and savings. A range of payment options is likely to be set out, including deducting a single payment from the patient’s estate after their death, or making several payments in advance during their working life.

Other possible options could be a co-payment system, where the state pays for the first chunk of care, then the rest is means tested; or a social care tax, working in the same way as national insurance.

Shadow Health Secretary Andrew Lansley said the green paper had been much delayed, and was unlikely to provide any firm conclusions. ”This publication will come after 12 years of broken promises to look at this issue. ”If the government merely plan to publish an options paper, then the problem will be kicked into the long grass once again. ”If that happens, then the Conservative Party will bring forward its own proposal for the funding of long-term care. ”Unlike the government, we will set out a clear plan for change for both the providers of social care and the 45,000 people who are forced to sell their homes every year to pay for it.”

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