While all that is true, in the 1950s you could put your wife in a ward just for annoying you. (Hysterical = Hyster, Uterus = Hysterectomy)
And today, who is going to pay for it? Those beds surely cost insurance companies thousands of dollars per day. How you going to recoup those costs if you have to lock the door and throw away the key? Or release them and they go homeless rambling man on the streets.
Hell, I am at the identifying the problem portion of the equation...solutions? Don't have them yet.
I'd assume a lot of people are being pumped expensive drugs that are not working...there would be some cost offset.
"Deinstitutionalization began in 1955 with the widespread introduction of chlorpromazine, commonly known as Thorazine, the first effective antipsychotic medication, and received a major impetus 10 years later with the enactment of federal Medicaid and Medicare. Deinstitutionalization has two parts: the moving of the severely mentally ill out of the state institutions, and the closing of part or all of those institutions. The former affects people who are already mentally ill. The latter affects those who become ill after the policy has gone into effect and for the indefinite future because hospital beds have been permanently eliminated.
The magnitude of deinstitutionalization of the severely mentally ill qualifies it as one of the largest social experiments in American history. In 1955, there were 558,239 severely mentally ill patients in the nation's public psychiatric hospitals. In 1994, this number had been reduced by 486,620 patients, to 71,619, as seen in Figure 1.2. It is important to note, however, that the census of 558,239 patients in public psychiatric hospitals in 1955 was in relationship to the nation's total population at the time, which was 164 million.
By 1994, the nation's population had increased to 260 million.
Most of those who were deinstitutionalized from the nation's public psychiatric hospitals were severely mentally ill. Between 50 and 60 percent of them were diagnosed with schizophrenia. Another 10 to 15 percent were diagnosed with manic-depressive illness and severe depression. An additional 10 to 15 percent were diagnosed with organic brain diseases -- epilepsy, strokes, Alzheimer's disease, and brain damage secondary to trauma. The remaining individuals residing in public psychiatric hospitals had conditions such as mental retardation with psychosis, autism and other psychiatric disorders of childhood, and alcoholism and drug addiction with concurrent brain damage. The fact that most deinstitutionalized people suffer from various forms of brain dysfunction was not as well understood when the policy of deinstitutionalization got under way.
Thus deinstitutionalization has helped create the mental illness crisis by discharging people from public psychiatric hospitals without ensuring that they received the medication and rehabilitation services necessary for them to live successfully in the community. Deinstitutionalization further exacerbated the situation because, once the public psychiatric beds had been closed, they were not available for people who later became mentally ill, and this situation continues up to the present. Consequently, approximately 2.2 million severely mentally ill people do not receive any psychiatric treatment."
https://www.pbs.org/wgbh/pages/frontline/shows/asylums/special/excerpt.html