A new report by the Intergenerational Commission has recommended capping elderly care costs at £50,000.
The report, which also recommends that people should not have to spend more than a quarter of the value of their assets on care home bills, calls for a £2.3bn health and social care funding boost by replacing council tax with a progressive property tax.
The changes would set the asset threshold at which people start paying towards their care at £150,000 with a £50,000 cost cap.
Local authorities would also allow people to continue payments after their death, ensuring that the elderly are not forced to sell their homes.
With state spending on health, care and social security set to rise by £24bn by 2030 and by £63bn by 2040, the Commission said this needed to be funded in a way that was fair for all generations.
The report also backs payment of a ‘care tax’ which would extend national insurance payments to people beyond the state pension age.
The proposal is expected to be among those submitted in this summer’s Green Paper.
Lord Willetts, the commission’s chairman, said: “If you have a 67-year-old working alongside a 57-year-old doing the same job for the same pay do we really say that the 67-year-old should take home more and have lower deductions?
“Pensioners are less likely to be poor than families of working age so it is only reasonable that when you look at healthcare provision that you look at a fair contribution from older people.”