“With the “deinstitutionalization” effort that began in the 1960s, hundreds of thousands of mentally ill men and women were released from state institutions. These people escaped grim conditions and sometimes brutal treatment. They largely did not, however, obtain proper care after their release. Rather than receiving continuing mental health treatment, mentally ill people were released to communities that had made little or no accommodation for their care.
While states cut funding for mental hospitals, they did not make commensurate increases in the budgets for community-based mental health services. Chronically underfunded, the country’s mental health system does not reach anywhere near the number of people who need it.”
http://www.counterpunch.org/mariner11052003.html
Of course, the insurance industry was complicit. They were more than happy to slash inpatient coverage and watch the hospitals close.