Following concerns about civil rights issues, cost issues, and a desire to move to a more "outpatient" approach, numerous legislations were enacted to "deinstitutionalize" the population of mental health hospitals. First in 1965, the federal government passed legislation that specifically excluded Medicaid payments for inmates housed in state psychiatric hospitals. As a result, the states were now required to provide care, and, looking to lower costs, many discharged hundreds or thousands of patients into society (Treatment Advocacy Center, 1999). In addition, legal reforms in the 1970's were passed that required an individual to be a danger to himself or to others in order for him or her to be treated involuntarily for their illness (Faust, 2003). The result was another mass release of patients into society.

             The results of deinstitutionalization are clear. Since 1960, nearly 90 percent of psychiatric beds in state hospitals have been removed. In 1955, nearly 600,000 individuals resided in state psychiatric hospitals; the number today is less than 70,000 individuals (Treatment Advocacy Center, 1999). Unfortunately, however, these numbers are misleading, in that they suggest a reduction in the number of mentally ill individuals, which is not the case.

             For many deinstitutionalized patients, the end result was simply a transinstitutionalization, or change of residence. While the Medicaid funds had been withdrawn for state psychiatric hospitals, those funds were still available for individuals with mental illness residing in nursing homes and general hospitals. As a result, many patients were simply transferred to these types of settings, where treatment options and care for the mentally insane were not nearly as advanced. By the mid 1980's, nearly 23 percent of nursing home residents had some form of mental illness (Treatment Advocacy Center, 1999).

             For other deinstitutionalized patients, the results were far more disastrous.