Fifty years ago the mentally ill generally had two choices: for the affluent, there was psychotherapy, and for all others, there were the state mental hospitals, which had a reputation for treating patients badly. Today's mental health system offers a far wider range of services for the seriously ill, including outpatient care, help with living arrangements, job placement and social support. In addition, it provides options for those with less severe psychiatric problems. The once dominant state mental hospitals now play a minor role.

Deinstitutionalization gained favor in the 1950s as psychiatrists came to believe that the mentally ill would do better as outpatients living close to relatives and jobs. This view gained momentum in the mid-1950s with the emergence of antipsychotic drugs, which improved patients' ability to function outside the asylum. With federal funding of community health centers and the start of Medicaid, states saw in the mid-1960s an opportunity to shift the cost of mental health care to the federal government. So they began transferring patients out of the mental hospitals to community health centers, nursing homes and other institutions. The number served by private psychiatric hospitals and inpatient units of general hospitals grew, but the most spectacular growth, as the chart illustrates, was in outpatient facilities.

This article was originally published with the title Deinstitutionalization.

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