The AAMC should increase the number of students they admit. The average medical school is turning away 95% of applicants. The top 10 schools in America are excepting <2.5%.
Doing this would make the problem worse by increasing the amount of unemployable newly graduated doctors that can't practice because they can't match into a residency program. Medical schools have exploded in number the past few decades compared to the actual amount of residency spots that have been opened.
The limiting factor isn't medical school admissions, it's residency spots. We'd need to increase medicare funding if we want more residency spots.
Conceptually, I'd agree with you. I don't think medicare alone needs to fund residency spots (its just currently tied to the amount of spots last I checked). I'm more concerned about the total number of residency spots.