It's tough to get an accurate sense of the economics of teaching hospitals. Much of the analysis comes down to highly subjective management accounting decisions about how to allocate fixed costs to various cost centers. Residents (especially the junior ones) require a lot of supervision by attending physicians, and much of that work isn't directly billable. The fact that those hospitals aren't rushing to voluntarily take on more residents indicates that the programs are net losers without government subsidies.

Wife is a doctor at a Miami suburb hospital (it's relatively well known), so I can tell you with confidence that the hospitals CAN absolutely pay $64K/year salary of residents on their own. It's just that they are cheap and do the bare minimum.

But yeah, AMA should stop requiring 8 years of education + 3 years of residency to become a garden-variety doctor. I can look up UpToDate, which most doctors and residents do, to diagnose and treat myself for most common illnesses IF I can purchase medication from pharmacy on my own.

The costs of employing a resident are a lot more than just salary, but as I noted above the numbers are kind of fuzzy. Certainly most teaching hospitals can take on a few more residents but would mean less money for a new MRI machine or administrator salaries or charity care or nice landscaping or whatever. So it's a matter of priorities. For better or worse, most organizations are always going to do the minimum.

There are a few colleges now offering accelerated 6 year MD degrees so hopefully that option will become more common. A lot of primary care is also being picked up by physician assistants who have less education.