Senate panel approves $4.2 billion health budget with Medicaid rate hikes

The Senate Budget Subcommittee for the Department of Health approved a $4.2 billion budget Thursday that delivers major rate increases to Medicaid providers and adds funding for food banks and infant learning programs.

The fiscal year 2027 budget totals $4,247,760,400, with $1.1 billion coming from unrestricted general funds and nearly $3 billion from federal sources. The subcommittee approved most of the governor's amended budget request but rejected an $8 million proposal for ongoing operations of a virtual call center.

Background

The approved budget continues a trend of significant health spending increases in Alaska. The state's FY2023 budget saw a historic $450 million increase to the Department of Health over the previous year, including $2.33 billion for Medicaid and enhancements for mental health and substance use treatment. The current proposal builds on that foundation with an additional $377 million in new Medicaid funding to support provider rate increases. The rejection of the virtual call center funding raises questions about access for Medicaid recipients who rely on the service for enrollment assistance and benefits navigation, though the subcommittee did not detail alternative plans for those services.

Budget details

The budget includes $377,298,200 in new Medicaid funding to support rate increases for providers across the state. The subcommittee also directed the department to raise rates for private duty nurses to align with Guidehouse recommendations, though specific dollar amounts for that adjustment were not disclosed at the meeting.

"The subcommittee reviewed the governor's amended request and approved all requested items with the exception of an $8 million request for ongoing contractual operations of the virtual call center," said Rose Foley, staff to Senator Bert Stedman.

Beyond the governor's request, the subcommittee added $2 million for Alaska food banks and pantries. The panel also approved just under $6 million for the Infant Learning Program, combining an inflation adjustment to existing funding with an expansion of the program's eligibility.

Other approved items include $21,041,900 for operation and maintenance of information technology systems and implementation of IT and community care licensing specialist class studies. The subcommittee also adopted carryforward language for four funds related to substance use education, reduction, and treatment.

Senator Dunbar moved to adopt the budget action and wordage report, with authorization for legislative legal staff to make technical or conforming changes as necessary. The motion passed without objection after Foley walked the subcommittee through the budget details.