The United States spends around $5.7 trillion on healthcare each year. However, millions of Americans remain uninsured or underinsured.

A new Yale study estimates that a single-payer healthcare system could cover every American while also reducing annual healthcare spending by $1.04 trillion. It also projects that such a system could save around 114,000 lives each year. Sounds too good to be true, right?

This study is not peer-reviewed research, nor is it a guarantee of the future; it is a modeled projection. But these numbers raise an important question: If a single-payer system could potentially save $1.04 trillion annually, where would these massive savings come from?

Administrative waste is one of the clearest examples. Americans are not just paying for doctors and hospitals. We are also paying for a large bureaucracy designed to determine who gets covered, how much is covered, and which insurance company is responsible for paying the bill. Then, every insurance company has its own system: different deductibles, different networks, different rates, and different rules for what doctors can and cannot do.

This creates an entire industry dedicated to navigating the healthcare system. Hospitals employ billing specialists, doctors employ insurance coordinators, and patients spend hours fighting denied claims.

This is money being spent on healthcare administration without actually providing healthcare. On top of this, there is the insurance industry, which operates with a profit motive. Private insurance companies are businesses with executives, shareholders, marketing departments, administrative costs, and other expenses. A single-payer system would not eliminate all administrative work, but it could eliminate much of the duplication created by competing insurance companies.

The same issue exists with prescription drugs. Americans should not have to pay dramatically more for the same medication simply because they live in the United States. A national healthcare system could use the purchasing power of more than 300 million Americans to negotiate lower prices with pharmaceutical companies.

Critics argue that a single-payer system would require a significant increase in government spending. They are right. But Americans already pay for healthcare through taxes, premiums, employer benefits, deductibles, and medical bills. That money does not disappear simply because the government becomes the primary payer.

We should not accept a system where having a full-time job does not guarantee that someone can afford a doctor’s visit, or where getting sick can ruin someone’s financial future. The Yale study identifies several areas where the projected $1.04 trillion in savings could come from, but those projections should still be carefully debated.

Still, the study raises an important question: Is universal healthcare possible in the United States?

Americans already pay for healthcare. The real question is whether we would rather see American healthcare dollars go toward providing care for Americans or continue to subsidize large insurance companies and other intermediaries.

America does not necessarily have a healthcare spending problem. It has a healthcare allocation problem.