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When the subject of health insurance is discussed someone raises the argument that because Medicare or Medicaid are government programs, they are subject to fraud. This is usually an objection from politicians who support Free Enterprise and fear Big Government. Let's be honest with ourselves, any human event that involves something of value attracts fraudsters. A bank robber, a hacker, a big company submitting false claims; all fall into the category of fraud. Any googling of Medicare fraud brings up some infuriating examples. For example, health care industry giant HCA (which the New York Times notes was bought by Bain Capital in 2006) eventually settled a Medicare fraud scandal (overcharging) for more than $1.7 billion. Or, last May the feds arrested 107 health care providers, including doctors and nurses, in several cities and charged them with cheating Medicare out of $452 million. In 2010, 94 people were charged with submitting $251 million in phony claims. Fraud isn't the product of scheming low-income beneficiaries - Mitt Romney's 47 percent - it is most often committed by big companies and rich doctors, not a patient seeking a second colonoscopy. We should admit that fraud is endemic to the insurance business, whether public or private. The Coalition Against Insurance Fraud estimates that in 2006 a total of about $80 billion was lost in the United States due to insurance fraud. According to estimates by the Insurance Information Institute, insurance fraud accounts for about 10 percent of the property/casualty insurance industry's incurred losses and loss adjustment expenses. So, how to tackle any fraud. Putting more police on the streets is an acceptable way of reducing crime. Private industry is free to hire as many investigators and accountants as it takes to catch fraudsters.

When investigators suspected that Houston's Riverside General Hospital had filed Medicare claims for patients who weren't treated, they moved to block all payments to the facility. Then politics intervened. Rep. Sheila Jackson Lee, a Texas Democrat, contacted the federal official who oversees Medicare, Marilyn Tavenner, asking her to back down, according to documents reviewed by The Wall Street Journal. In a June 2012 letter to Ms. Tavenner, Rep. Jackson Lee said blocking payments had put the hospital at financial risk and "jeopardized" patients needing Medicare. Weeks later, Ms. Tavenner, administrator of the Centers for Medicare and Medicaid Services, instructed deputies to restore most payments to the hospital even as the agency was cooperating in a criminal investigation of the facility, according to former investigators and documents. "These changes are at the direction of the Administrator and have the highest priority," a Medicare official wrote to investigators. About two months after that order, Riverside's top executive was indicted in a $158 million fraud scheme. The hospital was barred from Medicare this May, and the CEO was convicted in October. What happened at Riverside General Hospital shows how political pressure from medical providers and elected officials can collide with efforts to rein in waste and abuse in the nearly $600 billion, taxpayer-funded Medicare system. More than a dozen former investigators and CMS officials said in interviews that they faced questions from members of Congress about policy changes or punitive action affecting providers or individual doctors.