State governments’ long term care obligations to Medicaid beneficiaries could ultimately undermine these governments’ effectiveness, according to a new report by Deloitte Consulting L.L.P, New York.

Medicaid covers a wide range of LTC services, including critical support for the poor in both community and institutional settings. The program pays for almost 34% of all paid home health care and 43% of nursing home spending in the U.S., according to the report.

As the nation’s primary payment source for LTC, Medicaid is putting enormous pressures on state budgets–with no relief expected from federal health care reform, says the report, Medicaid Long-Term Care: The Ticking Time Bomb, from Deloitte’s Center for Health Solutions.

If current trends in long term care expenditures go on, Medicaid budgets would almost double by the year 2030 as a percentage of state operating budgets–close to 40% in some cases, Deloitte estimates.

To meet the challenge, states need to look at Medicaid within the larger context of health care reform, their own health care spending goals and the intricacy of health care costs, Deloitte’s report suggests.