The Baldacci administration Monday expanded the state’s Medicaid program to include parents whose kids are already eligible for the government-funded health insurance, potentially adding 10,000 people to the Medicaid rolls for an estimated cost of $10 million annually.

Parents whose income is between 150 to 200 percent of federal poverty – or $29,000 to $39,000 for a family four – are now eligible for Medicaid coverage. The money to cover them will come from the Dirigo Health fund, which has about $47 million left in it from a one-time pot of aid provided to the state by the federal government.

Parents can sign up for health coverage through traditional Medicaid – known as MaineCare in this state – or through DirigoChoice health insurance, if their employers have signed onto the program.

If all those eligible sign up, more than 270,000 people or close to 21 percent of the state’s population could be on Medicaid by the end of the year.

Gov. John Baldacci announced the expansion at a press event in the Statehouse Monday. Kindergarteners from St. John’s School in Brunswick – in the Statehouse for a school tour – provided the backdrop and were given hand-made signs by Dirigo supporters reading: “Thank you governor” and “Maine families thank you.”

Baldacci said the expansion will help working families. “Parents need the security of health coverage to keep families strong,” he said.

Sen. Carol Weston, R-Waldo County, the assistant minority leader, said expanding Medicaid at this time was wrong since the state just cut programs in the budget for the elderly and disabled because there wasn’t enough money.

“Here we are ignoring that and making believe that somehow we can expand Medicaid and meet everyone’s needs,” she said. Asked why the governor would pursue such a course, she said: “06.”

“It appears to me he’s saying ‘can I make everything look good and hold things together until after the election?'”

Baldacci, flanked by Democratic leaders, emphasized that offering coverage to parents whose kids are already eligible is another way of addressing the problem of the uninsured in the state.

While DirigoChoice’s role in the program was center stage, it is unclear how many parents would come in through that insurance program and how many would just sign up for Medicaid.

Under DirigoChoice, the state’s subsidized health insurance program offered through a joint venture with Anthem, employers pay 60 percent of a market-rate premium, but eligible employees get a discount on their 40 percent share based on their income. The governor said 6,369 members were enrolled in DirigoChoice as of May 1.

If those parents newly eligible for Medicaid worked for an employer who signed up for DirigoChoice, their part of the premium would be completely covered by the state, but the program would benefit from the employer’s 60 percent contribution.

If not, the parents could be straight Medicaid clients, which over time could deplete the Dirigo fund.

Baldacci said by insuring 10,000 new parents, hospitals and doctors could save $10 million in bad debt and charity care and that, he said, was enough to cover the cost of the expansion.

The state plans to recoup those kinds of savings tied to DirigoChoice enrollment through a tax on regular insurance premiums. The assessment likely will be 3 percent of the total premiums collected by an insurance company or 3 percent of claims paid for those that are self-insured, the state announced last month. The legislation that created DirigoChoice allows for up to 4 percent to be collected. There is nothing in the legislation that prevents that tax or assessment from being passed along to consumers.