ELDERLY people could be forced to pay up to £20,000 under Government plans to fund end-of-life care.

The compulsory insurance scheme is one of three options for funding a new National Care Service, designed to end the current "cruel lottery" under which some elderly people have to sell their homes and use up most of their savings to pay for care, while others pay nothing.

Health Secretary Andy Burnham said he wanted to create a system "fair, simple and affordable" to all.

He has already ruled out full state funding from general taxation, on the grounds it would place too great a burden on people of working age, and retaining the "pay for yourself" system, which is unfair to those who need years of care for conditions like Alzheimer's.

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Critics said hundreds of thousands of people had been forced to sell their homes in the last decade because Labour ministers had failed to "grasp the nettle" of funding social care.

Councils warned the issue was particularly acute in the West, where up to one in five people is over 65.

Mr Burnham announced a consultation on three possible solutions to the funding crisis, including:

A "partnership" approach, under which the state would pay around a quarter to a third of the cost of basic social care and support, leaving individuals to find the remainder;

A voluntary insurance scheme, under which the state would pay the same proportion, but would also make it easier for individuals to take out insurance – at an estimated cost of around £20,000 to £25,000 at today's prices – to cover the rest;

Compulsory insurance for all, costing around £17,000 to £20,000 at today's prices and providing free care for all who need it.

The National Care Service would offer assistance with needs like dressing, washing and moving around at home, but individuals who need to go into residential care would continue to pay the cost of accommodation and food themselves, whether they had taken out insurance or not.

However, new national arrangements would allow for bed and board costs to be deferred and paid as a lump sum after the individual's death.

Under all three options, those with little or no savings or assets would continue to receive free care.

Mr Burnham said the cost of care at the end of life was "the stealthiest tax of all". "It is a real injustice that people who have worked all their life and paid taxes all their life, if they are unlucky enough to develop a condition like Alzheimer's in later life, they get no help to deal with the implications of that condition," he said.

Coun Stuart Barker, Devon County Council's cabinet member for adult social care, said a debate on funding services is "long overdue".

"Devon has one of the largest percentages of older people within its population and is a popular retirement destination for many people," he said. "That's why this issue is so important to us, because the current arrangements for supporting care of the elderly is financially unsustainable in the long term."

Lib-Dem health spokesman Norman Lamb said: "Hundreds of thousands of older people have been forced to sell their home over the last decade because Labour was not prepared to grasp the nettle of care reform."