If you've spent on average ~200K for medical school, how willing will you be to pay to work for 3 to 8 more years before you get a paycheck? Resident doctors already make less than nurses with 4 year undergraduate degrees.
So? People really, really want the prestige that goes with being a doctor. If they could pay for it they would. Physician compensation is heavily weighted towards middle and late career as it is and that hasn’t stopped people beating down the doors to get into medical school. Half the people who currently apply to medical school could look at how crap it is and decide not to and there would still be intense competition.
The below article on how awful medicine and medical school are was written a decade ago and nothing has gotten better. People really like social status.
I know a lot of doctors and medical students, for the vast majority prestige is not a primary motivator, not sure why you think its the prestige motivating everyone.
Knowing these people, I also get the feeling that if pay were worse / debt was higher they would have pursued alternate careers. If your goal is to make more physicians you don't want to make the job less desirable. There are already paid residency positions that go unfilled every year (not because there arent enough students, but because the students dont want them). I don't know why you think people would pursue positions that they have to pay for.
To your other point on the intense competition: If half the people currently applying to medical school quit applying the quality of your average future doctor would drop.
