Department of Health presents FY27 budget and HR1 SNAP/Medicaid implementation; governor’s amend raises DOH to $4.3 billion

Department of Health officials appeared before the House Finance Committee Feb. 18 to present the department's FY27 operating‑budget overview, FY26 supplemental items and implementation plans for changes enacted in HR1 (SNAP and Medicaid).

Pam Halloran, assistant commissioner, said the governor's amended FY27 budget released that morning increases the Department of Health's budget to about $4.3 billion, with $1.1 billion in unrestricted general fund included. Halloran said the FY26 supplemental rolls in about $778.1 million, and that the department's original FY27 proposal released in December was roughly $3.82 billion.

Halloran and Deputy Commissioner Emily Ricci highlighted Medicaid components in the governor's amend, including $334 million in added federal authority and $42,288,100 in general‑fund authority incorporated into the amendment. Ricci said timing quirks — such as an additional provider‑payment week in FY26 — contributed to a larger FY26 general‑fund impact and noted that the Federal Medical Assistance Percentage (FMAP) is projected to decline about 1.5 percent in FY27.

Ricci described two main avenues the department uses to preserve general funds: tribal reclaiming (when services for Alaska Natives delivered outside tribal health organizations can be claimed at 100% federal match under a coordinated care agreement) and drug‑rebate recoveries. She said a team in the Division of Health Care Services focuses on maximizing these federal matches.

Behavioral‑health spending and grants were highlighted as investments the department has expanded, including Section 1115 behavioral‑health waiver services that began in 2019. Halloran said recent supplemental budget language carries forward multi‑year behavioral‑health clinic funding and that the FY27 budget maintains open‑ended federal receipt authority for Medicaid services to allow flexibility tied to FMAP and enrollment changes.

On public assistance, Halloran outlined supplemental requests related to SNAP: an extension of system investments through FY28 (just under $6 million), a $21 million request for eligibility‑systems operating costs and a $5.9 million FY26 supplemental to maintain the virtual contact center (with an $8 million FY27 need for that contact center). She said the department is modernizing client tools (an Alaska Connect portal) and moving Medicaid and SNAP eligibility systems off legacy platforms, a modernization effort expected to complete in 2027.

Hedberg and Ricci also reviewed HR1 changes signed in July 2025 affecting SNAP and Medicaid. Hedberg said the able‑bodied adult age range for work requirements shifted to 18–64 (affecting fewer than 800 households), and Ricci summarized proposed Medicaid community‑engagement requirements that would require many individuals ages 19–64 to document qualifying activities (for example, about 80 hours/month) beginning Jan. 1, 2027. Ricci said the department's preliminary estimate — using system data available in February — indicated roughly 69% of current Medicaid expansion enrollees could be identified as qualifying for an automatic exemption under HR1; she emphasized details are still pending guidance from CMS.

Committee members asked clarifying questions about opioid‑settlement distributions, senior‑center grants (Halloran said $2.5 million was distributed to 60 grantees to support senior centers), average costs for Medicaid beneficiaries with multiple chronic conditions and whether funding in the amended budget addresses wage or rate increases for care providers; the department said some items (for example, provider rate increases) were not included in the governor's amend and that the NRI assessment tool and other investments aim to improve person‑directed care and efficiency.

Committee members asked the department to provide follow‑up data (for example, lists of senior‑center grantees and further detail on settlement amounts and schedule). The department said staff will return with more detail at future hearings; the committee adjourned without taking votes on the department requests during this session.