Montgomery, Ala. (WDNews) – The Alabama Medicaid Agency is requesting $1.184 billion from the state for the 2026 fiscal year, an increase of about $229 million from this year’s budget.
Medicaid Commissioner Stephanie Azar told legislators Thursday that the rise is primarily due to health care cost inflation. “We have to build that in to make sure that we can pay our providers for what comes along,” Azar said.
The request marks a significant point for Alabama Medicaid, which provides coverage to about 20% of the state’s population, pays for over half of Alabama’s births, and supports hospitals, nursing homes, and medical practices. Despite strict eligibility rules, the program is a critical part of the state’s health care system.
Azar clarified that the actual budget increase is $53 million, but it appears higher due to the loss of federal COVID-19 aid. Since June, Alabama’s Medicaid enrollment has dropped by nearly 300,000, bringing the total to 1.081 million—almost back to pre-pandemic levels.
Medicaid is the largest expense in Alabama’s General Fund budget, but the federal government covers about 73% of the program’s costs. Next year, the state expects to receive over $7 billion in federal Medicaid funding.
Rep. Rex Reynolds, chair of the House General Fund Ways and Means Committee, said the committee will work to accommodate the agency’s request.
