In the 1080’s while Reagan was president, the left sued and was successful in making the mental asylums release anyone sane enough to ask to be released. THen the left blamed Reagan for the homelessness problem that resulted when the insane were released.
We also had virtually no homeless problem in those days. You couldn't just decide to be a vagrant. In those days, cops would vacuum these folks right off the streets at night and take them to shelter, where they would likely be subject to psychiatric evaluation. Many of them ended up in the institutions, others got released to a family member and others just straightened themselves out. But being homeless and just sleeping on the streets was just not allowed in our society. At least not on a significant scale.
The book and movie "One Flew Over The Cuckoo's Nest" started the movement to clean out our institutions and we are living with the results of that today. Were conditions at an institution similar to those depicted in OFOTCN? Perhaps. But the solution would have been to improve the institutions and gear them more towards treating and releasing people on merit as opposed to keeping them locked up - not to just open the doors and let everybody walk free.
Those released should be able to care for themselves, but the law does not care and they end up on the street.