The culprit is the AMA.
> In the 20th century, the AMA has frequently lobbied to restrict the supply of physicians, contributing to a doctor shortage in the United States.[10][11][12] The organization has also lobbied against allowing physician assistants and other health care providers to perform basic forms of health care. The organization has historically lobbied against various of government-run health insurance.
The doctors are simply wrong; the state is correct from a pernicious point of view.
Because the state is responsible for buying so much of the total supply of medical care, they generally view things from the perspective of "how much are we spending on the category 'medical care'?", rather than the perspective of how much any given treatment costs.
Increasing the number of doctors lowers the cost of all treatments and is unambiguously good.
However, it does raise the total amount of medical spending, which, in the eyes of the state, is bad.
That’s the view of the government?
Or induced demand.
That said, likely individual medical outcomes would be better.
Large scale systems tend to produce… odd behaviors.