Fraud should be a concern, however at some points, the attempts to eliminate it outweigh (in terms of cost and effort) the effect of its existence. At that point it becomes a morality issue rather than a practical one.

For comparison, I wonder if the CBO was given full investigatory power into private insurance, would they discover a higher or lower fraud percentage? It would not surprise me if they were higher, and that at some point they just accepted that fraudulent claims would be cheaper to ignore than to uncover, based on dollar amounts and so on. It similarly of course wouldn't surprise me if they were lower being able to deny more people at the outset, or were able to use more information to find high risk claims (that privacy concerns prevent the government from using for the exact same purpose).