Current law:

Medicaid is an open-ended entitle- ment program. The federal government pays a share of each state’s cost of providing care for beneficiaries. That share varies among states, but the national average is nearly 60 percent.

Federal Medicaid funds would be limited under a per-beneficiary cap that takes into account what a state has spent traditionally, adjusted for inflation. House leaders are also expected to introduce an option for states to choose a block grant — a single lump sum not linked to beneficiary numbers.

States could pick a per-beneficiary cap, a block grant or the cur- rent system. If they choose the current system, they would lose the more generous matching funds for new beneficiaries covered by expanded Medicaid.

If states choose a per-ben- eficiary cap or a block grant, they would not have to take a complete plunge. Initially such limits would apply only to spending for able-bodied adults, including people covered through expanded Medicaid. It would be up to each state to decide whether to accept caps or block grants for sensitive groups of bene- ficiaries, including children, pregnant women, and elderly and disabled adults.

House bill: Governors: Current law:

State Medicaid programs must cover FDA-approved drugs for med- ically accepted uses. Pharmaceutical companies pay Medicaid rebates to states under a complex formula. A costly new drug like recent ones for hepatitis C can cause havoc with state budgets. Not addressed.

States would be able to exclude coverage for a given medication. The option to exclude a drug would give them leverage in price negotiations with drug companies.

House bill: Governors: