State supplemental budget reaches $178 million, prompts Medicaid concern

Health Commissioner Valerie Nurr’araaluk Davidson speaks during a discussion on Medicaid in February 2016. Medicaid costs are $92 million more than budgeted this year. (Photo by Skip Gray/360 North)

Gov. Bill Walker’s administration provided a final number on the amount of extra money it plans to spend this year beyond what the Legislature budgeted: $178 million.

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Most of this cost — $92 million — is from Medicaid. Roughly a third of that cost is due to the Legislature funding Medicaid at a lower level than state officials projected costs would run. On top of that, those projections were too low. Officials say more people enrolled in Medicaid due to the recession.

Health Commissioner Valerie Nurr’araaluk Davidson described this in a recent Senate Finance Committee meeting.

“These are unprecedented times for our state,” Davidson said. “The downturn in the economy has resulted in more folks enrolling in Medicaid than we anticipated. “

Eagle River Republican Sen. Anna MacKinnon told her that lawmakers are concerned about the spending.

“I’ve heard conversations in the halls of the Legislature that this administration, not specific to your department but including your department, is ignoring the Legislature’s intent to try to control costs and hold down the operating budget,” MacKinnon said.

Davidson said the costs couldn’t be avoided.

“I certainly haven’t been provided a directive or a nod and a wink from anyone in the Walker administration that it is OK not to control our costs,” Davidson said. “We certainly have those conversations about efficiencies. They are an agenda item in every cabinet meeting we have with the governor.”

Some lawmakers raised the possibility of narrowing Medicaid eligibility.

One potential approach is to require recipients to be employed.

State officials said three-quarters already work.

And many of those who don’t must look for work to receive other public benefits.

Andrew Kitchenman is the state government and politics reporter for Alaska Public Media and KTOO in Juneau. Reach him at

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