HHS nominee says Medicaid overhaul will be a priority

Leavitt, a former Utah governor and current Environmental Protection Agency administrator, said giving states more flexibility in how they use federal Medicaid money would allow them to cover more people while holding down federal costs. He told the Health, Education, Labor and Pensions Committee the program "is not meeting its potential to do good in the lives of the poor."

Health, Education, Labor and Pensions ranking member Edward Kennedy, D-Mass., asked whether Medicaid could simultaneously hold down costs, increase enrollment and maintain quality care.

Although senators were friendly to Leavitt, who needs approval from the Senate Finance Committee and a full Senate vote to be confirmed, they pressed him on a range of issues, including recent findings that some Food and Drug Administration-approved drugs had serious side effects.

Senators also urged Leavitt to advocate for a permanent leader for the FDA, which has been operating for the last year and a half without a permanent director.

Leavitt said implementing the new Medicare drug law would top his agenda at HHS. But he threw cold water on some senators' proposals to allow the head of HHS to negotiate with drug companies for better prices for Medicare beneficiaries.

"I think that is better left to the market," he said.

Earlier, at a breakfast meeting for reporters, top health staffers from the House and Senate generally agreed Medicaid and FDA would top the year's agenda. But they hinted that changes might not be as easy as the Bush administration hopes. For example, said a Senate GOP aide, a cap on Medicaid "would have a hard time passing the Senate."