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ANNAPOLIS — State officials are hopeful that they will receive more help from the federal government to cover the 609,000 Marylanders on Medicaid.

While most of the reform legislation before Congress would not take effect until 2013, the version passed by the House of Representatives on Nov. 7 includes $23.5 billion to help states where more people out of work and without health insurance have turned to the government and driven Medicaid costs skyward.

Without an extension of federal aid for the state-administered health benefits for the poor, Maryland could be forced to scale back the health coverage expansion that began in 2008, Senate Finance Committee Chairman Thomas McLain Middleton said earlier this month.

"I think that you'll hear from the presiding officers, the leadership, that we're probably going to have to look at whether or not we can afford what we just expanded," Middleton (D-Dist. 28) of Waldorf told business leaders at a Maryland Chamber of Commerce conference in Cambridge.

In July 2008, the state began enrolling parents with annual incomes up to 116 percent of the federal poverty level — currently $25,578 for a family of four — whose children were enrolled in the Maryland Children's Health Insurance Program. Previously, the state had offered Medicaid to people earning up to 40 percent of the federal poverty level.

The plan, passed during a 2007 special session that also saw tax hikes and a plan for slot machine gambling, included subsidies so that owners of business with two to nine employees could offer coverage to workers earning below $50,000 a year.

It was primarily funded by doubling the cigarette tax to $2 per pack, but a large portion of the expansion also was to be funded by savings on costs incurred by hospitals caring for the uninsured.

Those so-called uncompensated care costs, which are passed on to insured patients in the form of higher premiums, were supposed to be held in check because more people would be covered by Medicaid.

Revenue from a slot machine gambling plan, passed during the same 2007 special session as the expansion law, also was supposed to be flowing into state coffers by fiscal 2011, allowing the state to expand coverage for childless adults.

"We thought we had it so that there wouldn't be any general fund expenditure," Middleton said.

It hasn't worked out that way.

The economy has tanked, tempering revenue projections for the state's fledgling slots program. Maryland finds itself with a mounting budget deficit, including a $2 billion gap for fiscal 2011, when Medicaid coverage of eligible parents is expected to cost about $96.8 million more than forecast in 2007, according to state budget analysts.

Federal reform is the best way to expand coverage in Maryland, health care proponents say. But with uncompensated care costs contributing to rising insurance premiums, short-term federal aid is needed first.

"You pay for that uncompensated care, so it's important," Middleton told business leaders. "And that's why I'm so hopeful that the feds will do something."

Until then, "I do not see the state of Maryland doing any type of major expansion," said Middleton, whose committee likely would have to approve any future Medicaid expansion bill.

The health care reform bill passed by the U.S. House includes a six-month extension in matching federal dollars for Medicaid.

The extension, through June 2011, would mean $384 million in federal aid for Maryland's general fund.

The U.S. Senate bill introduced last week includes a similar provision: an enhanced federal match of Medicaid dollars when the economy dips below a certain point.

When passed in 2007, the expansion plan was to be a first step toward providing coverage for the nearly 800,000 Marylanders without health insurance.

So far, 51,000 parents of children enrolled in MCHIP and 223 employers, representing another 1,046 people, have enrolled in the expansion, according to the state Department of Health and Mental Hygiene.

As a result, Maryland now ranks 16th among states in Medicaid eligibility for adults, up from 44th two years ago, said Vincent DeMarco, president of the Maryland Citizens' Health Initiative, who cited data from an April survey by the Kaiser Family Foundation.

DeMarco's group, which has led efforts to notify and enroll people who are newly eligible for benefits under the Medicaid expansion, is continuing to push for more coverage. The group plans to release a report next week showing the health benefits of an alcohol tax.

The report could give advocates another tool for advancing a bill that would use alcohol and tobacco tax increases to further Medicaid expansion to childless adults.

DeMarco acknowledged that lawmakers will have little appetite for tax increases in an election year.

"But they should consider the health care benefits of an alcohol tax," he said.

With or without a new expansion bill, under the rules tied to the $750 million a year in federal stimulus aid Maryland already has received, the state must keep Medicaid coverage at June 2009 levels through 2010.

Cutting coverage or limiting the expansion "is not at this point part of our consideration," state Health Secretary John M. Colmers said last week. "Our goal at this point is to work as hard as we can with our [congressional] delegation to get the recovery and reinvestment dollars extended for Medicaid."

The aid would provide a quick, much-needed infusion to the state budget, he said.

"Medicaid enrollment is high," Colmers said. "And I don't think we're going to be out of it by January of next year."