Well, you could have that many fewer funded residency slots, or hospitals could just pay residents less salary and benefits (perhaps at the same time liberalizing a program's moonlighting rules so folks don't starve). Or if a hospital deemed medical training part of its mission it could pitch in funding from another source. Most likely a combo of the above. It's not going to be feasible for every hospital to just say, we need 20 residents to fill all our shifts but we are only funded for 10, so we will just distribute the workload amongst those 10. But you might say let's cut salaries by 30% to fund 3 more people, and lets increase the workload by 10% so we hit our 80 hour/week cap, and lets find private donors to fund a residency slot and pretty soon it's back to the same number of man-hours.
However it works out, if the hospital is getting less money per resident it will have to cut down personnel, salary, benefits and maximize hours to end up in a manageable situation. I don't see it happening radically, but some amount of cuts are certainly possible.
As for the person above who thinks the only lawyers earning $40k/year are public servants, I think you are not well tuned in to the legal employment landscape and probably shouldn't weigh in. Small and mid-sized law firms have tightened belts, but for many years now the average lawyer salary has been pretty low. The gap between big firm and non-big firm lawyers has significantly widened in recent years. It's not really a public servant vs private distinction. Never was.
