There's no reason the federal government needs to pay resident salaries — except that no other major player is willing to do it. Hospital cost accounting is always kind of squishy and confusing but on average it seems that teaching hospitals lose money on their residency programs, so they need some kind of subsidy to make up the difference. Most of these teaching hospitals are run by local governments or non-profit foundations. Where will the money come from? There are a small number of residency slots funded by other sources but those are only a fraction.