PROVIDENCE -- Governor Carcieri will hold a news conference at 2 p.m. to help explain the 123-page "historic agreement" he announced Friday with federal officials that could fundamentally transform Rhode Island's health-care system for the elderly, poor and disabled.

The Carcieri administration has worked for months to negotiate the controversial five-year deal, which has significant short- and long-term implications for the state's finances and 180,000 Rhode Island residents who receive Medicaid funding.

The Ocean State is the first in the nation to secure such a deal.

"This is a landmark agreement that addresses one of the nation's most pressing public policy issues," Governor Carcieri said in a statement. "Medicaid spending has increased drastically, and the current funding structure is forcing states to cut other critical programs, like education, highways and public safety or raise taxes significantly. This agreement will put us on a sustainable path for growth in Medicaid while also maintaining services for those most in need."

Medicaid consumes roughly $1.8 billion in state and federal spending this year, or 25 percent of the total state budget.

Specifically, the agreement gives Carcieri unprecedented authority to change things such as nursing-home care, prescription-drug coverage and medical-related transportation programs which are now closely regulated by the federal government. In exchange, Rhode Island has agreed to limit Medicaid spending over five years to $12.075 billion, or about $325 million less than state negotiators had hoped.

The spending caps, which are divided into fixed annual allotments beginning Jan. 1, give Rhode Island government a strong incentive to limit health-care spending. Should the state run out of money in any given year, it could lead to waiting lists for some services, or even the elimination of others.

-- Steve Peoples, Journal State House Bureau