The number of Medicare funded residency slots are limited by law. Medical schools won't graduate more doctors because residency can't be guaranteed. Who wants to be the med school who graduates doctors with >$100K debt and no path to licensure?

In the 1990s the AMA lobbied congress to get the number of Medicare-funded slots limited. This was done in response to a projected "oversupply" of doctors (preventing a deflationary effect on doctors' compensation). That limit has stuck and now, even though the AMA is lobbying for the removal of the limit, the damage to the supply of doctors has been done and it's a process with a long pipeline.