Maybe Dad was just being modest when he told me that he couldn't have gotten into med school without an undergrad degree these days. Also note that I was talking about competitiveness of admissions, not competitiveness of the classes. You seem to mostly be commenting on the competitiveness of the classes.

Is ‘Hyper supportive’ a synonym for ‘universities realized they could make more money by making things easier’?

Isn't it still the case that nearly all med schools in the US are capacity constrained anyway? There's no sense in pandering for extra students you can't take on anyway, especially if it harms your program's reputation. More likely, they realized some aspects of med school nearly amounted to hazing, with little demonstrated educational benefit. (Again getting back to American culture's tendency to conflate difficult with beneficial.)

Yes, the supply is capped by residency spots available.

They reason they became hyper-supportive is because admissions have become insanely brutal, most poor performers have been screened out before they even apply. The marginal benefits of making the program even harder likely amounts to nothing more than hazing.

It’s simply politically untenable to kick out students during the program, given the already artificially constrained supply of newly minted physicians and regional shortages of talent.