Arizona's $18.3 Billion Budget: What Physicians Need To Know

June 12, 2026

Governor Hobbs Signs Bipartisan Budget, Preserves GME Funding as Legislature Adjourns

After months of contentious negotiations, Governor Katie Hobbs and Republican legislative leaders reached a bipartisan agreement on an $18.3 billion state budget. Both chambers passed the package with strong bipartisan support last Thursday. The legislature then adjourned sine die on Saturday after debates bled into the early morning. Hobbs signed the budget into law that same day.


The final budget includes significant tax cuts and spending restraints alongside targeted healthcare investments. The budget also provides funding for senior services, food assistance programs, and civil legal aid aimed at preventing evictions. 


Several governor-proposed priorities — including new revenue measures and expanded community assistance programs — did not survive negotiations. Legislative leaders from both parties characterized the agreement as imperfect but preferable to earlier proposals that would have imposed deeper cuts across state agencies.


ArMA's Advocacy Team represented the physician community's interests throughout the months-long budget debate, most notably lobbying for the preservation of critical graduate medical education funding, which was at risk of being swept. 

Here's what the physician community should know about Arizona's FY2027 budget:


Positive Outcomes for Healthcare in the Budget

The outlook for new or expanded investments in healthcare was immediately dim this year due to limitations on the state's finances. However, there are several provisions the physician community can celebrate as we emerge from budget discussions that threatened severe cuts.


Key healthcare provisions preserved or established in the final budget include:

  • More than $4 million in GME funding was preserved after physician advocates relentlessly lobbied legislators on the importance of maintaining funding.
  • $4 million for the Behavioral Health Crisis Services Hotline (9-8-8) within AHCCCS.
  • $4.3 million (one-time) to continue critical access rural hospital aid.
  • Up to $1.2 million earmarked to operate the Arizona Perinatal and Pediatric Psychiatry Access Line — a program ArMA is proud to support — using the University of Arizona's General Fund allocation


AHCCCS & HR1 Provisions

Following the passage of House Resolution 1 — the federal spending package — legislators were tasked with ensuring the state budget conforms to new taxation provisions and Medicaid access requirements. Therefore, the budget include several items that will impact the Arizona Health Care Cost Containment System:

  • Appropriates $10 million for 75 FTE positions to implement HR1.
  • Conforms to all HR1 taxation provisions for the current year and FY2026; conforms to certain provisions for FY2027 and beyond.
  • Requires AHCCCS to comply with federal Medicaid law and regulations on member eligibility redeterminations, including a new requirement — effective Jan. 1, 2027 — that states must renew eligibility for Medicaid expansion adults at least every six months.
  • Requires AHCCCS to review the following data sources when determining member eligibility: death records, federal data on out-of-state benefit enrollment, substantial lottery or gambling winnings, and Arizona Department of Economic Security information on changes to unemployment benefits, employment status, or wages.
  • Prohibits self-attestation for verifying residency; requires independent agency verification for eligibility determinations made under the federal health insurance exchange.
  • Revises the hospital presumptive eligibility program to establish determination standards and limits it to children and pregnant women.


Rural Health Transformation Grant Program

In January, Arizona received $167 million from the federal Rural Health Transformation Program — a federal program designed to support rural healthcare infrastructure and workforce development. The state's application for RHTP funding outlined four strategic priorities, including developing the rural healthcare workforce, expanding access, initiatives, and more. 


The FY2027 budget establishes a new fund under AHCCCS to administer federal Rural Health Transformation Program grants. Before the executive branch may expend any grant funding to make progress on its outlined initiatives, AHCCCS must:

  • Hold three public meetings to gather comments
  • Submit a report to the Joint Legislative Budget Committee detailing its expenditure plan


ArMA contributed to the state's proposed plan for allocating funding alongside hospitals, community health centers, behavioral health providers, nursing organizations, Medicaid health plans, and other stakeholders. We look forward to remaining involved in the program and will continue to advocate for rural health in Arizona.


Looking Ahead

With the budget signed and the Legislature adjourned, attention now turns to implementation.


For a comprehensive report on what this year's legislative session meant for the physician community, be sure to read ArMA's 2026 Legislative Report — coming later this summer. 

ADHS Issues Standing Orders for Flu, COVID-19 Vaccine Access

By Admin User • September 18, 2026
Statewide orders keep pharmacists and physicians authorized to vaccinate Arizonans amid uncertainty over the next ACIP meeting. Statewide Orders Cover the 2026-27 Flu & COVID Season The Arizona Department of Health Services has issued statewide standing orders supporting access to the 2026-27 influenza and COVID-19 vaccines approved by the U.S. Food and Drug Administration. Arizonans seeking a flu or COVID-19 vaccine should contact their physician or pharmacy to confirm availability. Why the Orders Were Issued Arizona pharmacists may administer vaccines recommended by the Advisory Committee on Immunization Practices, vaccines recommended by the Centers for Disease Control and Prevention for international travel, or vaccines authorized under a prescription, including a physician-issued public health standing order. With the timing of the next ACIP meeting uncertain, ADHS worked with the Arizona Board of Pharmacy to issue statewide standing orders for the flu and COVID-19 vaccines, which function as a prescription allowing pharmacists and physicians across Arizona to administer them to anyone who wants one. ADHS Medical Advisor Weighs In "Vaccines are one of the most important tools we have to protect our communities. The Influenza and COVID-19 vaccines have been proven safe and effective at preventing severe illness, hospitalization, and death. Vaccines help us limit the spread of disease, reduce pressure on our healthcare system and reduce costs," said Dr. Richard Carmona, ADHS public health medical advisor and the 17th U.S. Surgeon General. "We have issued these standing orders to ensure safe and timely access to the vaccines in alignment with scientific and evidence-based guidance." What Arizonans Should Know The standing orders do not require every pharmacy to offer vaccinations, and they do not guarantee insurance coverage for administration. Coverage and out-of-pocket costs vary by plan, so Arizonans should check with their insurance provider before scheduling an appointment. 

Arizona Asks Supreme Court to Halt Prison Health Care Takeover

By Admin User • September 18, 2026
State attorneys seek an emergency stay after lower courts reject bids to delay receivership of the prison health care system. State Makes a Last-Ditch Appeal Attorneys for the Arizona Department of Corrections, Rehabilitation and Reentry asked the U.S. Supreme Court this week to delay a court-ordered receivership of the state's prison health care system. The request comes after both a federal district court and the 9th U.S. Circuit Court of Appeals declined to pause the takeover. In the recent application, former U.S. Solicitor General Paul Clement, a representative of the department, argued that the state deserves more time to make its case before surrendering control of its operations, including oversight of its employees and health care budget. Roots of the Case The dispute began in 2012 when inmates sued the department, alleging the prison system's inadequate medical, mental health, and dental care amounted to cruel and unusual punishment under the Eighth Amendment. The case went through years of litigation and a failed settlement agreement. In 2023, U.S. District Judge Roslyn Silver ruled that the health care system was "grossly inadequate." The court ordered the prison healthcare system to comply with more than 150 "quality indicators," but according to court-appointed monitors, the department failed to comply with 131 of the measures. In light of this finding, Silver named Annette Chambers-Smith, former director of the Ohio Department of Rehabilitation and Correction, to take over as receiver effective Oct. 19. Arguments on Both Sides Clement argues receivership should be the last resort and that Silver moved to it too quickly. He asserts that the department has made measurable progress, including growing its health care staffing by more than 50%, expanding substance-use treatment access, and adopting a new care model. Corene Kendrick, deputy director of the American Civil Liberties Union National Prison Project, which represents the roughly 25,000 people incarcerated in Arizona prisons, called the department's request a "Hail Mary" and said Silver had given the department years of opportunities to comply before ordering receivership. What Happens Next The Supreme Court has not yet set a deadline for the plaintiffs to respond to the stay request. Separately, the 9th Circuit is now reviewing the merits of the receivership order itself. The department filed its opening brief on Sept. 15, and the plaintiffs' response is due Oct. 15. Information in this article was sourced from the Arizona Mirror .