While protecting others is certainly an admirable goal, the trouble in the case of the FAA aeromedical system is that there is no good evidence that the requirement for a 3rd class medical to fly GA aircraft for recreation improves the safety of flight.
The FAA argues that their experience with the HIMS program is indirect evidence that it helps and the data from Sport Pilot indicates no effect. Pretty weak evidence.
So the serious question is whether such mixed evidence is a valid justification for forcing pilots to endure all this time and expense. I would argue that the overall experience with regulatory systems also bears on this point and suggests it is likely not worth it from any rational evaluation of the cost of accidents, both in terms of lives lost and money.
The sort of problems you note here, an agency becoming overly intrusive, continuing unnecessary expenses, etc. are all typical problems with regulatory schemes to prevent bad outcomes. See Mises “Bureaucracy”.
