Actually, a 3 to 6% rate of "cheating", to use an umbrella term to cover all kinds of theft (but not productivity sinks), is fairly typical of most organizations with ordinary internal controls and oversight. As I mentioned before, you can spend more to find it and prevent it, like banks do, but you still have to use a Pareto approach else you'll start losing more on enforcement. At the end of the day, 3 to 6%.
So 7% is not astounding, if it makes his point anyway, but we can certainly discuss how much fraud is tolerable in such a government program. I think the big fruit is found within military/industrial contracts, but the auditors there are... probably captured anyway.
Ah yes. Organizations with ordinary internal controls and oversight. Like the government, right? Didn't I just read that 7 or 8 out of 10 undercover folks who tried to sign up for Obamacare subsidies were granted them under false pretenses?