Deinstitutionalization of mental health care (United States, 1955 to 1999)

State mental hospital populations fell from about 559,000 in 1955 to under 72,000 by 1994 while community care was promised but unevenly built; links to jails and homelessness are documented associations, not proven causes.

The record

The starting point: large state hospitals

• The number of patients in state and county mental hospitals peaked in 1955. Three sources give slightly different counts (see the table below). (Torrey excerpt on PBS Frontline; Congressional Record, Sen. Moynihan, 1999; both opened)
• On February 5, 1963, President Kennedy sent Congress a special message on mental illness and mental retardation. It said states "have depended on custodial hospitals and homes," and that "The time has come for a bold new approach." It proposed federal grants for "comprehensive community mental health centers." (American Presidency Project; opened)

Timeline

Counts of the state hospital population

• Torrey, a psychiatrist who argues for stronger treatment and commitment laws, also estimates that about 763,391 severely mentally ill people were living in the community in 1994 who would otherwise have been hospitalized. This is his estimate, built from assumptions about population growth. (PBS Frontline excerpt; opened)

Federal law: grants, Medicaid and the IMD exclusion

• Public Law 88-164 (October 31, 1963) authorized grants for construction of community mental health centers. The authorization amounts above are for construction. We did not open the later law on staffing grants, and we did not find how many centers were planned or built. (GovInfo, 77 Stat. 282; opened)
• Under current law, federal Medicaid matching funds are not available for care for a person "who has not attained 65 years of age and who is a patient in an institution for mental diseases." An IMD is "a hospital, nursing facility, or other institution of more than 16 beds that is primarily engaged in providing diagnosis, treatment, or care of persons with mental diseases." There are exceptions, including inpatient psychiatric services for people under 21. (42 U.S.C. 1396d, Cornell LII; opened)
• MACPAC, the congressional Medicaid advisory commission, attributes the exclusion to states' role as the main payer for inpatient behavioral health and a preference for community care. It lists 2016 problems: coverage varies by age, and substance use facilities with more than 16 beds are all IMDs. (MACPAC, The Medicaid IMD Exclusion; opened)
• Whether the exclusion in practice pushed states to close hospitals or only froze the system as it was is argued in the literature. We did not open a study that tests this. Unverified.

Courts and states

• California's Lanterman-Petris-Short Act limits involuntary holds. As summarized by Disability Rights California, a person cannot be held for mental illness alone; a 72-hour evaluation hold (section 5150), a 14-day treatment hold (5250), and conservatorship for "grave disability" (the person cannot provide food, clothing or shelter because of a mental disorder) follow. Conservatorship requires proof beyond a reasonable doubt and a unanimous jury if requested. The Act's stated aim was to "end the inappropriate, indefinite, and involuntary commitment of persons with mental health disorders." (Disability Rights California; opened. This is an advocacy group's summary; we did not open the statute.)
• Olmstead v. L.C., 527 U.S. 581 (June 22, 1999): "Unjustified isolation, we hold, is properly regarded as discrimination based on disability" under Title II of the Americans with Disabilities Act. A state must provide community treatment when its treatment professionals find it appropriate, the person does not object, and it can be reasonably accommodated considering the state's resources and the needs of others. Justice Ginsburg wrote; Part III-B was a plurality of four; Justices Thomas, Scalia and Chief Justice Rehnquist dissented. (Justia; opened, last 14,650 characters not read)

Jails, prisons and homelessness: documented associations

• Bureau of Justice Statistics (James and Glaze, 2006), using 2004 prison and 2002 jail surveys: 56% of state prisoners, 45% of federal prisoners and 64% of jail inmates had a "mental health problem," meaning a past diagnosis or treatment, or self-reported symptoms meeting DSM-IV criteria. The report calls the symptom estimates "a baseline indication of mental health problems among inmates rather than a clinical diagnosis." It describes associations (younger, female, substance use, abuse histories, homelessness) and does not claim causes. (BJS; opened)
• On whether closing hospitals caused this: advocates say hospital closure sent people to the criminal system; a 2019 paper by Jacobs and Panichelli summarizes the other side, that macro studies find neither hospital closures nor service spending regularly predict arrest rates, that a study by Raphael and Stoll called the relationship "largely spurious," and that symptoms are directly involved in only about 8 to 15 percent of arrests among people with serious mental disorders. Their own data are 23 interviews and not meant to be general. (Deviant Behavior, 2019, PMC7500566; opened, secondhand account of other studies)
• Homelessness: HUD counted 771,480 people experiencing homelessness on one night in January 2024, 497,256 sheltered and 274,224 unsheltered; HUD warns the count is a snapshot and may undercount. The portion of that figure with a serious mental illness was not in the pages we opened. (HUD, 2024 AHAR Part 1; opened)

What this case shows

1. The plan was public, but the promise was bigger than the funding we can document. Kennedy's 1963 message and Public Law 88-164 told voters community centers would replace custodial hospitals. The statute we opened authorized construction money only. People could read the plan; we found no public count of what was built. (American Presidency Project; GovInfo)
2. A funding rule shaped where care could be paid for. Medicaid since 1965 has not paid for adults aged 21 to 64 in large psychiatric institutions. Voters in a state could decide whether to run hospitals, but a federal rule changed what each choice cost. (42 U.S.C. 1396d; MACPAC)
3. Individual rights and treatment access pulled in different directions. California's 1967 law narrowed involuntary holds and added hearings. Olmstead held that unjustified isolation can be discrimination, but only when professionals judge community placement appropriate, the person does not object, and resources allow. People with the most severe illness may be both protected and left without a bed. (Disability Rights California; Justia)
4. Those who bore the cost were often not in the room. Patients, families, jails and local emergency services absorbed the shift. Jails now hold large numbers of people with mental health problems, but the data we opened show association, and the causes remain argued. (BJS; Jacobs and Panichelli)
5. The numbers themselves are public and still not agreed. The 1955 census appears as 558,239, 558,922 and about 559,000. A decline of roughly 87 percent by 1994 depends on the baseline and on counting hospitals only, not nursing homes, general hospitals or jails. (Torrey; Congressional Record; our calculation from Torrey's figures)

The strongest objections, and our answers

1. Objection: Deinstitutionalization was a rights reform, not a failure. Kennedy called custodial care a failure; California's Act aimed to end indefinite commitment; Olmstead treats unnecessary institutional segregation as discrimination. Mitigation: We state these aims. We do not call the outcome a failure or a success. We report what the sources document: fewer hospital beds and uneven community care.
2. Objection: Closing hospitals caused homelessness and jail crowding. Mitigation: Torrey and others argue this. The sources we opened (BJS, HUD) show high rates of mental health problems among inmates and a large homeless count, not a cause. Jacobs and Panichelli summarize studies finding little link. We say "association."
3. Objection: Torrey is an advocate, so his numbers are suspect. Mitigation: His 1955 count matches Moynihan's within about 700. His estimate of 763,391 people is labeled his estimate.
4. Objection: California and one Supreme Court case do not describe the whole country. Mitigation: Correct. LPS is one state's law, and other states differ. We use it as an example of a state choice, not a national rule.
5. Objection: Advocacy and secondary summaries are weak sources. Mitigation: We mark which were advocacy groups (Disability Rights California), which were academic secondary accounts, and which were primary (statutes, opinions, BJS, HUD, Congressional Record).

Open questions: what would change our minds

• How many community mental health centers were funded and built, and how much operating money followed. Not opened.
• The role of medicines, hospital abuse scandals, state budgets and court cases in the decline. Not opened. Our case does not claim a single cause.
• Any study that directly tests whether the Medicaid IMD exclusion changed state hospital closures.
• The text of the California statute (Welfare and Institutions Code) was not opened; we relied on an advocacy summary.
• The portion of the 2024 homeless count with a serious mental illness. HUD's report had no such figure in the pages we read.
• Current-year jail and prison figures. The BJS report uses 2002 and 2004 surveys.
• The Olmstead opinion's final section and the dissent were not read.

Sources

Evidence status and correction history

Key claims

Correction history

Found an error or a better source? We keep every correction on the record with its date and reason. Nothing here is quietly rewritten.