Texas soon will seek federal approval for a wide-ranging experiment designed to curtail costs in Medicaid, the country's main health care program for the poor.

The plan is still being written but already has raised concern over how the poor will be treated and whether it will benefit insurance companies at the expense of safety-net hospitals, such as Parkland Memorial Hospital in Dallas. "There is no doubt that Medicaid reform is the biggest health care challenge that we face," Gov. Rick Perry said after he and key GOP lawmakers met over breakfast Friday with U.S. Health and Human Services Secretary Mike Leavitt. Mr. Perry offered few details of what he will propose.

But he is expected to ask Mr. Leavitt for as much leeway as states can be given to tinker with Medicaid under a federal budget deficit-cutting law signed a year ago by President Bush.

The governor and a spokeswoman said the plan would:

• Offer subsidies so that more of Texas' small businesses provide health insurance to their employees.

• Give "customized" benefits packages to different groups of Medicaid recipients.

• Put part of the benefit in a "savings account" under a patient's control, which is a pet idea of conservative health care experts.

"Escalating costs and increasing enrollment has made our current system unsustainable," Mr. Perry said. "Together, with our state and federal partners, we must develop a more flexible and efficient system."

But Mr. Perry's talk of innovation raises red flags among some who have studied Medicaid for a long time.

"Didn't they reform Medicaid in 2003?" said Rep. Craig Eiland, D-Galveston, referring to an agency-consolidation bill that cut poor adults' benefits and launched a much-criticized effort to use privately run call centers for social program signups.

"We will certainly wait for more details of the governor's proposal," said Mr. Eiland, a key House budget writer for six years.

Ron Anderson, Parkland's president and CEO, said public hospital executives haven't seen details of Mr. Perry's plan but are worried it will parallel one Mr. Bush proposed in his State of the Union speech Tuesday night.

The president would partially pay for tax breaks he hopes will induce more Americans to buy private health insurance by taking away some of the money Medicaid now gives hospitals that treat a lot of uninsured people.

"It's a rob Peter to pay Paul game," said Mr. Anderson, who estimated that Parkland could lose up to $83 million a year in payments.

Perry spokeswoman Krista Moody declined to say how the governor would finance his ideas on health savings accounts and small business subsidies. State Medicaid experiments usually don't mean more federal matching money, only a rearranging of how it's spent.

Ms. Moody said a part of the Texas proposal would be comparable to a request that officials at the University of Texas Medical Branch at Galveston made 16 months ago.

They asked Mr. Leavitt to approve a "Three Share Program" in which low-income employees at small businesses in Galveston County could buy health coverage. The tab would be split equally among the employee, the employer and the state. Federal officials have made no decision on UTMB's plan.