Poor and myopic decision IMHO from AMA here for several reasons:
1) Step 1 levels the playing field in the modern era. You can go to school anywhere, and as long as you work hard, you've got a shot at your dream residency. Now what? We return to a 1996, pre-internet era where institutional name matters that much more? This decision carries a thinly disguised anti-immigration mindset.
2) This won't decrease med student anxiety; it's just going to shift the focus/attention to 2CK. Now everyone will ignore Step 1 and just obsess over 2CK. In other words, 2CK will simply become what Step 1 is now. Emphasis on grades will also become greater. Rather than students fixating on boards, they'll simply fixate on their med school's out-of-touch lecture material instead.
3) Residencies will actually have less objective information available to them about qualified candidates. The layered effect of requiring numerical scores for Steps 1 + 2CK, with these exams assessing different aspects of knowledge, helps residencies evaluate candidates objectively. Grades are subjective at best and vary by institution. Without a Step 1 score, programs will look strictly at 2CK + grades. In turn, the process of applying to residency will become the same as applying to med school - i.e., everything rides on MCAT + grades; well for residency, everything will just be 2CK + grades.
4) This is probably the most important one: You're going to get doctors who are literally less educated. You cannot romanticize that 100% of the med student population is going to study their foundational concepts assiduously for fun. Most people function within the realm of practicality: "Ok, I did UWorld once and did decent. I've gotta focus on these random slides my professor put up. So, yeah, I'm done with Step 1 prep." Students will now ignore basic sciences and just study clinical material instead. You'll get MS1 students reading 2CK books without even understanding basic endocrine or pathophys anymore. Result is greater proportion of future doctors won't understand the mechanisms for the diseases they're treating.