This decision isn't a huge surprise. My thoughts:
The problem of Step 1 Mania is multifactorial. Med students think that the value of S1 for applications is much more impactful than it is. Social media doesn't help, stories spread and everyone starts to panic that if they get a 239 they will be "screened out". Programs have had increased applications, leading to more rejections, which only worsens the problem. And a whole industry has arisen to study for steps, which also worsens the spiral.
Really fixing this problem will require a much more broad solution -- better evaluation metrics, decreasing application inflation, better data for students to assess their competitiveness, and perhaps changes to the match. Making S1 P/F is a bandaid over cellulitis -- the redness may be invisible now, but it will spread.
The sky is not falling. The same number of residency spots will be available in the 2022 match (or whenever this happens), with the same number of students applying for them. "low ranked MD schools" (whatever that actually means) aren't going to all of a sudden have all of their students matching to FM. DO's will not be squeezed out of the match. It will all basically be the same.
Programs that care about step scores will shift to S2CK. This will mean that students will need to take S2 earlier -- the current "play the game" of take S2 early if you did poorly on S1, delay until after applications if did well and only release if you did better won't work any more. Programs that had cutoffs for S1 will just create them for S2, and they will be higher since the average score on S2 is higher. Programs that care about prestige of medical school will continue to do so. The world will continue, it will honestly not be that different.
The real issue here isn't that S1 is PF, it's the threat that all of the steps could become PF. The NBME managed this process and essentially completely excluded Programs, IMG's, and DO's. I can live with S2CK scores. If there are no scores at all, then that's a huge problem for programs, and especially for IMG's. I predict (as many of you) that the insanity will just shift to S2, and it's only a matter of time until that becomes PF also.
So, we need a broader solution - something that US MD schools can live with, yet meet the needs of IMG's and programs. Any faith that I had that the NBME would be reasonable and listen to programs is shattered. Ultimately, I expect that each specialty will build their own exam -- we control it, no one can tell us what to do. Using multiple shelf exams instead of a single USMLE exam sounds interesting -- more data points, less affected by "a bad day", etc. My main problem with this solution is that I REFUSE TO ALLOW ANY SOLUTION TO INCREASE INCOME TO THE NBME. Every IMG and DO taking shelf exams would do just that.
We should remember that, at the end of the day, essentially all US grads find a residency spot and all spots are filled. So, any change in the application process just shuffles the deck -- some people might do better while others might do worse. Whether that's good or bad depends upon how you look at it, and what new metrics replace it (and whether YOU did better or worse!). For now that will be S2 which is basically the same. If S2 becomes PF and there's no new exam, then imagine the pressure on schools to increase the rate of Honors/A, etc.