Translation:Mar sin leat, a bhalaich.
The h signifies that a consonant has undergone lenition, which is a grammatical process most often triggered by a preceding word. In this case, the lenition of the b of balach > bhalaich is because of the vocative particle a. Some other examples are a Sheumais from Seumas, a Chatrìona from Catrìona, a Mhàiri from Màiri, a Dhòmhnaill from Dòmhnall.
I'm just guessing now, but perhaps you got confused due to the lack of h in e.g. a Nèill from Niall. There it is absent, because for the consonants N, L, R lenition is not written, and so they never get an h. And the clusters sm, sg, st, sp are immune to lenition – as a name I can think of Sgàire, which in the vocative is just a Sgàire.
Finally, names starting with a vowel, like Iain, do not get an h either, since lenition is a process only applies to consonants. The vocative particle also disappears in these cases to avoid vowel collision, so you simply say Iain when addressing an Iain.