We have lots of questions about the decisions by the University of Maryland Medical System, Kaiser Permanente and CareFirst BlueCross BlueShield to buy or finance the purchase of Mayor Catherine Pugh’s Healthy Holly books. But at least there’s some nexus between those companies’ missions and the message of the books, which is to promote healthy eating and exercise among kids. It’s even within the ballpark of the mission of Associated Black Charities, which solicited tens of thousands of dollars to buy Healthy Holly books, to serve as an “educator, advocate and supporter to eliminate race-based structural barriers and advance long-term solutions that create new opportunities for African Americans to thrive financially and build a stronger economy for all.”
Are there better materials on the market to achieve those missions? Would they have even given a second glance at Healthy Holly if the books weren't written by a state senator who sat on the committee that regulates the health care industry, who served on the UMMS board and who went on to become mayor? Great questions, and there are plenty more about how those deals went down. But at least those entities have some plausible reason to care about childhood obesity and/or racial health disparities.
But the Maryland Automobile Insurance Fund, established in 1972 to provide auto insurance to Marylanders who can't get it on the private market? There is no earthly reason why it should have bought Healthy Holly books. What did MAIF get out of the $12,500 it spent on the books, either directly or through Associated Black Charities, in 2012 and 2013?
The obvious answer is suggested by then-Sen. Pugh’s successful lead sponsorship of MAIF’s top legislative priority in 2013. But here’s the other weird thing — she should have needed no inducement to support the proposal. It was a good bill.
Unlike private auto insurers, MAIF was prohibited by state law from charging its premiums in monthly or quarterly installments. Customers had to pay the entire year’s premium up-front, and since MAIF’s customers are overwhelmingly poor, most couldn’t afford that. Ninety-seven percent of MAIF customers, to be precise. What the law allowed was for them to engage the services of a premium finance company, which would typically charge outrageous interest and fees so that MAIF’s customers would have the privilege to spread out their payments.
In 2011, the Maryland Court of Appeals ruled that the way the largest of these companies calculated finance charges was illegally excessive. As a result of that ruling, MAIF’s 36,000 customers saw their payments drop by $2.7 million a year. The politically connected premium finance companies fought back, and then-Sen. John Astle, an Anne Arundel Democrat, sponsored a bill that would have overturned the court ruling. We opposed that at the time and noted, “If members of the General Assembly are truly interested in MAIF, what they ought to be doing is supporting Baltimore Sen. Catherine E. Pugh's proposal to allow MAIF to accept premiums on an installment basis. That reform could save drivers as much as $300 per year. That would be a nice little bonus for families struggling to make ends meet.”
The MAIF installment issue was not new. Bills trying to overturn the prohibition on spreading out MAIF premiums had been introduced at least five times in the preceding eight years, and Ms. Pugh had been the lead sponsor twice before she eventually succeeded. She was joined in the effort by most members of the city’s Senate delegation on measures that had notable bi-partisan support.
Whether or not there was any connection between the Healthy Holly books and Senate Bill 930 of 2013, there was definitely a major connection between Ms. Pugh and MAIF’s long-time director, M. Kent Krabbe. He donated to Ms. Pugh’s campaign fund in his personal capacity for the first time in 2008 and would do so 11 more times, culminating in a $5,000 check he sent shortly before the 2016 Baltimore mayoral primary. (The Pugh campaign would return $1,000 to him because he exceeded donation limits for the cycle.)
Meanwhile, MAIF faced questions in 2010 about an audit showing that its board had changed its compensation rules so that management employees got $407,000 in bonuses at the end of 2008 even though the insurer had run a $19.6 million loss that year. Ms. Pugh said at the time, “I didn’t find bonuses to be an issue.” Later, Mr. Krabbe would work on Ms. Pugh’s mayoral campaign (and be paid nominally for it), become president of her inauguration committee (which, we recently learned, had failed to file required forms with the IRS three years after the fact) and land a six-figure job in the city transportation department to “develop policy regarding the management and funding of special events,” a position that did not previously exist. He left the department a year ago.
Does any of this amount to a quid pro quo? We have no evidence of that. Is it cozy? Definitely.
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