What Medicare will or will not cover is of immense importance to older Americans. The extent of coverage for, say, home health care or prescriptions can make a huge difference in the health and budgets of millions of Americans. So anytime the system can save a few dollars in otherwise wasted money, it is good news for those in need of care.

But what if Medicare could save not just a few hundred thousand dollars or even several million, but $23 billion a year? That’s 14 percent of the total Medicare budget and it is the amount stolen from the system each year.

The Senate’s Permanent Subcommittee on Investigations, led by Sen. Susan Collins, recently held its second hearing on the subject of Medicare fraud, and discovered that even the simplest scams can wring millions of dollars out of the Medicare Trust Fund and go on for years before anyone notices. Sen. Collins described a fictitious company with an address at the Miami International Airport that was paid $6 million in Medicare money, a Laundromat on Brooklyn, N.Y., that received $117,000 for providing health services and a $300,000 reimbursement for medical tests sent to a Mail Boxes, Etc. address in Florida. Not a penny of this money went to health care.

These aren’t cases of a few doctors exaggerating the actual services they provided to patients; these are criminal operations that do not even bother to make a pretense of offering services. They bill Medicare and Medicare pays. No questions asked.

That was the experience of the hearing’s most interesting speaker. He was a convicted felon who bought a firm that supplied nutritional milk and feeding tubes to the elderly. He quickly realized that the profit in his business came not through milk but through milking the system. He used his clients’ Medicare numbers to bill for all sorts of services he never provided. Soon, he stopped buying the milk as a cover for his activities and just paid patients and doctors to supply Medicare numbers. He claims he averaged between $180,000 and $200,000 a month in reimbursements, and estimated that his total take was $32 million.

His conclusion about the oversight of the Medicare is this: “My biggest mistake in this fraud scheme was buying the milk. I would have made more money if I didn’t spend any money on milk.”

Not that it needs to be said, but of course the overwhelming majority of Medicare providers are honest, hard-working and offer good services. But the General Accounting Office’s estimate that 14 percent of Medicare money is lost to fraud is astonishing. As a comparison, the amount stolen from Medicare each year is larger than next year’s expected federal budget surplus.

Not only does this fraud deny needy people important health benefits, it erodes confidence in the system that will become even more important in the coming years. Who can trust a trust fund where the federal government mails 14 cents of every dollar to a criminal?

Now that the Senate subcomittee has identified the problem, it needs to devise an effective oversight system that is not so onerous that it overwhelms honest providers. And it should do so quickly; contributors to the Medicare system should not have to suffer another years of losing $23 billion.