While President Trump’s Big Beautiful Bill contains big, heavy-handed cuts to health care spending throughout the country, Republicans tried to throw a bone to rural communities in the form of $50 billion in federal funding over the next five years.
For Alaska, that equates to about $200 million annually.
The hope is that it’ll address longstanding problems with health care access and affordability in rural areas. Just how that first batch of money will be used, however, is largely in the hands of Republican Gov. Mike Dunleavy’s administration, which in its seven years has run up a litany of accounting problems while making ethically questionable (but not necessarily illegal) no-bid contracts.
The lack of legislator oversight is a product of the state’s budgeting rules, which allow the governor to request budget changes outside of the legislative session and without the typical hearing process. State officials said they plan to distribute the money through an application process with proposals ranked on a yet-to-be-developed scoring system, akin to how the state funds major school maintenance or port maintenance.
Legislators on the Legislative Budget and Audit Committee took up and approved the spending this week — they agreed it’s important to get out sooner than later — but not before several expressed misgivings about the state’s track record.
“Here’s an additional $200 million that’s potentially coming every year, and I am concerned about the accounting capabilities of the department,” said Anchorage Republican Sen. Cathy Giessel. “I’m not going to oppose this (spending), but I do think that we need to keep track of how the money is spent and make sure that it is being appropriately used and accountable.”
Giessel was referencing the findings of Legislative Auditor Kris Curtis, who provided an update to the committee at the outset of the meeting about what she said has been a “degradation” in the state’s financial recordkeeping. Curtis has raised concerns for years about the state’s worsening accounting problems, particularly around federal grants, warning that they could put the state in deep financial trouble with federal rules.
“We have seen degradation within the departments’ internal controls. I believe that results from of lack of documented written procedures. You have continued turnover … really a lack of experience at the agencies,” Curtis said earlier in the hearing. “I think that seeing a lack of experience, lots of turnover, and vacancies. I think we see general poor training that’s within the Division of Public Assistance. I think that might be a result of inexperienced folks doing the training or (the training) procedures. Yeah, it’s gotten progressively worse.”
While much of her focus has been on the state’s suspiciously secretive handling of oil and gas tax payments, she has also flagged several issues with the state’s Department of Health and Department of Family and Community Services (which used to be one department before Dunleavy split them via executive order). Many of the accounting errors stem from messy, incomplete, or missing bookkeeping records that aren’t properly tracking spending at the level required by the federal government.
It means that sometimes the state could end up shouldering costs that should have been paid by the feds or be on the hook for spending that wasn’t properly documented.
For legislators with a more long-term view of the state’s finances and risks, the future of the $200 million, as well as the next four years of funding, weighed heavily.
“Here we are, in lieu of the Finance Committee and appropriation process,” said House Speaker Bryce Edgmon, I-Dillingham. “I’m trying to figure out exactly how much of a ‘blank check’ authority we’re granting ot the administration.”
Edgmon also questioned whether the funding would actually flow to rural communities, noting that under the bill’s vague rules, Anchorage could be eligible.
For their part, state officials have downplayed the seriousness of the accounting errors, arguing that, in some cases, it’s a matter of differing opinions about what the law requires. As for the health care fund, state officials said they’d be willing to meet with legislators during the upcoming legislative session to review the program and discuss how future years should be spent.
“That’s a conversation that we can have during the legislative process,” said Department of Health Budget Director Lacey Sanders.
Why it matters
Trump’s Big Beautiful Bill is expected to reduce Medicaid spending in Alaska by about $2 billion over the next 10 years, according to the Kaiser Family Foundation, largely due to work requirements that are expected to be more punitive bureaucracy than anything. That pencils out to $200 million a year, which is the same amount Alaska’s expecting to receive under the Rural Health Transformation Fund. The big difference, of course, is that the cuts are set to happen in perpetuity while the transformation fund runs out in five years. And that’s not to mention the impacts on urban centers.
It’s a problem state lawmakers, health care groups and local advocates have warned will be a disaster for the state’s already-expensive, not particularly accessible health care system. And while Alaska’s Congressional delegation may have secured various carve-outs for the state, we’re already seeing swift impacts of the cuts on other states, as a slew of rural hospitals are cutting back services or considering closure.
Insulating Alaska from the pain of the Republicans’ cuts would be a difficult task for any administration, let alone one that has been distinguished by chronic understaffing, turnover and poor practices that can be most charitably chalked up to inexperience.
Matt Acuña Buxton is a long-time political reporter who has written for the Fairbanks Daily News-Miner and The Midnight Sun political blog. He also authors the daily politics newsletter, The Alaska Memo, and can frequently be found live-tweeting public meetings on Bluesky.
