It's good to remember that the AMA and other medical groups lobbied for capping the residency slots back in 1997 (when an "oversupply" of doctors was forecast).

From [1]:

> "The United States is on the verge of a serious oversupply of physicians," the AMA and five other medical groups said in a joint statement. "The current rate of physician supply -- the number of physicians entering the work force each year -- is clearly excessive."

> The groups, representing a large segment of the medical establishment, proposed limits on the number of doctors who become residents each year.

> The number of medical residents, now 25,000, should be much lower, the groups said. While they did not endorse a specific number, they suggested that 18,700 might be appropriate.

They've changed their tune (which I, cynically, think is because the members in the late 90s have all "gotten theirs" by now).

[0] https://www.washingtonexaminer.com/thanks-to-doctors-there-a...

[1] https://www.baltimoresun.com/news/bs-xpm-1997-03-01-19970600...

[2] https://www.nytimes.com/1997/03/01/us/doctors-assert-there-a...

[3] https://www.cnn.com/2017/03/13/health/train-more-doctors-res...

[4] http://www.cnn.com/HEALTH/9708/24/doctor.glut/

So we didn’t have physicians before government started funding residencies? I think not, I think we used to have physicians just fine 100 years ago. So what changed?

Medical education with residencies only really started in about 1930. Before that there was no real consistency, and the results were terrible in terms of iatrogenic harm.

https://medlineplus.gov/ency/article/001936.htm

The other thing that changed in the past 100 years is that Americans on average are older, sicker, and have higher demand for healthcare.