Bryan Caplan  

Naming Names

Economic Therapy... Curiosity and Humility...

When Gandhi told us, "We must be the change we wish to see in the world," I can only assume he was talking about reputational incentives in the health insurance industry.  So I thought I should finish my "Punk'd by Krugman" story and clarification by naming names.  The insurer that denied care - and then reversed its decision after a simple phone call was... Aetna.

Deeper question: If a company quickly corrects a mistake, does that make it more or less reputable than a company that doesn't make a mistake in the first place?  I can see arguments on both sides.  Your thoughts?

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COMMENTS (10 to date)
Alex writes:

It's a matter of degree. I would prefer a company that had never ever made a mistake and never would to one that had made one and corrected it within 5 minutes; but I would also prefer a company that made two mistakes and corrected them in 5 minutes to a company that made one mistake and took 3 years to correct it. 'S all trade-offs man.

Willem writes:

As one who works hard to prevent making mistakes, I hope:

no mistakes > mistakes and honesty > mistakes and dishonesty

As a consumer I usually shop / fly low cost / low service. Still I love the stories of companies that deliver great over-the-top service after they admit a mistake.

I hope I don't have to start making mistakes to own up to them to gain reputation.

The Cupboard Is Bare writes:

Sooner or later, every company makes a mistake. What's most important is to find out the kinds of mistakes that they make (and how often) and how quickly, efficiently and effectively they own up to and correct those mistakes.

Bob Smith writes:

This is not a big deal. Every health insurance company sends out thousands of duplicate EOBs everyday.Upgrading the technology would cost a lot.

Joshua Macy writes:

In my field we say all software has bugs, the only question is do you know where some of them are yet? My feeling is that companies that "never make mistakes" are mistaking their incredible luck for great skill and when they make a mistake it will be really hard to get them to recognize and correct it, since they'll have no experience with how to do that and might even lack procedures. Moreover if they take pride in never making mistakes, in order to get them to fix your problem you first have to get them to swallow their pride. I'd rather deal with a firm that admitted that mistakes happen and took pride in fixing them promptly, with a minimum of fuss, and to the customer's complete satisfaction.

guthrie writes:

Cupboard and Joshua have it. There's no such thing as a 'perfect' company. One can't build a reputation on making no mistakes because the instant you say 'we never make a mistake', you become immediately suspect. Mistakes WILL be made.

IMO, again in agreement with Joshua, the reputable company is the one that makes a) a reasonably low number of mistakes, b) a minimal number of egregious mistakes, and c) when mistakes occur, it is admitted to and they work hard and quickly to fix it, and doing so in a manner that is conciliatory and pleasant... customer service is as much assuaging emotions as it is fixing problems and mistakes.

liberty writes:

Ha! Nice first sentence. Also, Aetna is apparently the second worst insurance provider for denial of claims. Who is the worst you ask?

Naming names, indeed.

Jim writes:

Watch out Byran; I bet this post counts as an endorsement under the new FTC rules.

Dr. T writes:

Reputability Scale:

#1. Company doesn't make mistakes that shortchange customers.

#2. Company sometimes makes mistakes that shortchange customers, but fixes them and apologizes when it discovers the mistakes.

#3. Company sometimes makes mistakes that shortchange customers, and fixes them when the customers complain.

#4. Company sometimes makes mistakes that shortchange customers, but fixes them only when the customers threaten legal action.

#5. Company sometimes makes mistakes that shortchange customers, and stonewalls when the customers complain.

#6. Company deliberately makes mistakes that shortchange customers, and threatens them when they complain.

dullgeek writes:

I think a company that makes no mistakes is unrealistic. As a result, I think these are the only realistic choices:

1) A company that fixes mistakes quickly
2) A company that fixes mistakes slowly
3) A company that admits mistakes but doesn't fix them
4) A company that doesn't admit mistakes - and doesn't fix them

They are ranked per my preference.

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