In a way, Kansas Gov. Kathleen Sebelius ’ handling of her state’s recent budget crisis could prove a telling test run if she is appointed to be President Obama’s secretary of Health and Human Services.

Facing a shortfall to the state’s $6.4 billion budget, Sebelius signed a bill on Tuesday cutting about $300 million from the budget, but in doing so largely spared health programs like the state’s Medicaid services.

Now, Sebelius is considered the leading candidate to head the Department of Health and Human Services (HHS), a position that would have her champion Obama’s efforts to overhaul America’s health care system in a time of financial austerity and tough budget choices.

In her several roles in state government, she has fought the insurance industry, protected state health programs, and boosted Medicaid pay to physicians.

“She’s somebody who understands the dynamics of health care very well,” said Tom Bell, president and CEO of the Kansas Hospital Association. “She understands how the system works and has a very good grasp of the moving parts.”

So far, White House officials have denied that any decision on a nominee has been made, though an HHS official did acknowledge that Sebelius is “one of” the top choices for the post.

Sebelius’ office has repeatedly said that she is focusing on her job as governor, but has not denied that she is under consideration.

Sebelius will be in Washington from Feb. 21-24, attending the National Governors Association conference, according to her spokeswoman. The conference ends Feb. 23, and Sebelius is scheduled to return to Kansas the next morning, leaving her with some extra time in Washington and generating speculation that Obama will announce Sebelius as his nominee then.

“I think there’s pretty broad opinion among the people in [Topeka] that some time by the end of the National Governors meeting there will be an announcement,” said Kansas State Rep. Melvin Neufeld, a Republican and a former speaker of the Kansas state House.

Sebelius brings a bipartisan approach to health care and appears to believe in a role for the private sector. At the same time, she has not been afraid to take on the insurance industry.

In a 2001 interview when she was still insurance commissioner, Sebelius walked the line between government regulation and a free market. “Competitive markets and solvent businesses and having people feel good about doing business in the state is not only good for industry, but for consumers, since it leads to better rates and services.”

And she also pushed to eliminate duplicate or cumbersome regulations. “What we’re trying to pull off is a balancing act between being effective protectors for the consumers of this country and not having lots of regulations and laws in place that impede the market,” she said in 2001.

While she lacks Washington experience, Sebelius, 60, has worked at almost every level of state government, serving as governor since 2003, state insurance commissioner and a state representative.