“The entire system of health care in our country is inefficient. We can dramatically improve it,” former Utah Gov. Mike Leavitt told members of the Senate Finance Committee during his second day of confirmation hearings. “We won't do it by futzing around the edges. We will have to be bold.”

In particular, Leavitt said the Medicaid program, which provides health coverage to those in poverty, “is not meeting its potential to do good in the lives of the nation's poor.” Senators praised his record as Utah governor and more recently as administrator of the Environmental Protection Agency.

Some Democrats, however, voiced concerns that the federal government might cap Medicaid payments to states, forcing them to drop coverage for the poor. Or they pointed to the use of waivers, like one that Utah received, that they said might erode coverage to those covered by Medicaid.

Sen. Jay Rockefeller, D-W.V., said states like his can't afford to absorb more Medicaid costs if payments are capped.

“I just question whether what you did in Utah sort of says, 'Well, we can do this in all of America,' ” said Rockefeller. "I would suggest to you that in Appalachia and other areas they can't and I would urgently hope that you would think about this matter now that you have the entire country population very much at your mercy or at your help."

While Leavitt was governor, Utah was the first state in the country to receive a Medicaid waiver, which allowed it to reduce benefits for many of those covered in order to provide basic coverage to 18,000 uninsured Utahns.

Since then, more waivers have been granted and $21 billion in Medicaid dollars are now administered by states under waiver arrangements. The Government Accountability Office, the investigative arm of Congress, said that in some cases those waivers skirt the law by providing less coverage than mandated by law.

Leavitt defended the Utah waiver and said governors should have flexibility to find innovative ways to cover their states' uninsured, as long as those guaranteed coverage by Congress are covered.

Sen. Olympia Snowe, R-Maine, challenged Leavitt to extend that flexibility to include importing less expensive prescription drugs from Canada, which is opposed by the Bush administration, and to use the government's purchasing clout to negotiate lower drug prices.

Leavitt said it is unclear if drug importation would reduce costs, but “if it can be shown that it can be done safely, then it's a discussion we should have.”

Leavitt disclosed a potential conflict of interest in his personal finances that he said he is working with the Office of Government Ethics to resolve. According to his 2003 financial disclosure, Leavitt holds a stake in his family's insurance business and owns stock in several pharmaceutical companies.

The committee is expected to approve Leavitt's nomination by next week, allowing a vote by the full Senate.